El Salvador is retracting after being the first nation to accept Bitcoin as legal cash four years ago. Since the country's Bitcoin Law has been amended by the Legislative Assembly, Bitcoin's legal standing has been essentially revoked. The measure was approved by the assembly, which is led by President Nayib Bukele's New Ideas Party, on January 29 by a vote of 55–2. Three of the Bitcoin Law's articles were repealed and six others were amended.

Under the new rules, bitcoin is no longer classified as "currency," although it is still considered "legal tender." Another change is that using Bitcoin is now optional, whereas before, businesses were required by law to accept it as payment for goods and services. Additionally, Bitcoin can no longer be used to pay taxes or settle government debts. The government is also reducing its involvement with Chivo Wallet, the state-supported digital wallet. The modifications will go into effect ninety days after they are published in the official gazette, which is anticipated within the next few days. The International Monetary Fund (IMF) and Bukele have a larger financing arrangement that includes the measures. A proposed $1.4 billion loan from the Extended Fund Facility included a requirement that El Salvador reduce "potential risks of the Bitcoin project."

The IMF has criticised the nation's cryptocurrency policy ever after Bukele legalised Bitcoin in 2021."There are large risks associated with using Bitcoin as legal tender, especially given the high volatility of its price. We don't recommend it," the organisation said in 2022. The administration maintains its commitment to Bitcoin in spite of these developments. According to El Salvador's ambassador to the US, Milena Mayorga, El Salvador is still a "Bitcoin country" and plans to keep its Bitcoin holdings intact, if not increase them. "You have to adapt to the current situation and this is the decision that was taken in the Assembly, but that does not mean that the country will stop having a Bitcoin reserve," she clarified.

Recent reports show that the government has bought seven more Bitcoins recently, increasing its total holdings to 6,055 bitcoins, which are worth about $612 million, according to official data. Although new laws suggest that the government is stepping back from President Bukele's bold Bitcoin plan, their ongoing investment in cryptocurrency indicates that El Salvador is not ready to completely abandon crypto just yet.