When El Salvador made Bitcoin legal tender in 2021, it didn’t just make headlines-it shook the foundation of how governments think about money. At the same time, China cracked down harder than any other major economy, banning mining, trading, and even access to offshore exchanges. Today, these two extremes aren’t outliers-they’re bookends on a global spectrum of crypto policy that’s reshaping finance, sovereignty, and digital freedom.
El Salvador’s Bitcoin Experiment: Bold Vision, Mixed Results
El Salvador didn’t just experiment with Bitcoin; it bet its entire monetary system on it. On September 7, 2021, Bitcoin became legal tender alongside the U.S. dollar. The goal? Reduce remittance costs, boost financial inclusion, and attract investment. By 2025, the country had rolled out 200 Bitcoin ATMs, launched the Chivo wallet for 4.3 million users (85% of adults), and even built a whole city-Bitcoin City-powered by volcanic energy and backed by $500 million in Bitcoin bonds. But the reality on the ground tells a different story. Only 28% of merchants accept Bitcoin directly, down from 45% in 2022. The Chivo wallet processes about 1.2 million transactions a month, but most users convert Bitcoin to dollars immediately. Why? Volatility. A 62% drop in Bitcoin’s price between late 2021 and 2022 wiped out $1.1 billion from El Salvador’s national holdings-3.4% of its GDP. The government’s $100 million Bitcoin Trust Fund helped stabilize things, but it didn’t fix the core problem: people don’t trust a currency that can lose a third of its value overnight. Even the promised savings on remittances were minimal. Instead of cutting costs by 3-5 percentage points, the World Bank found remittance fees dropped by just 0.8 points-from 5.2% to 4.4%. And while the state once fined businesses for refusing Bitcoin, that rule was softened in late 2023. Now, businesses can convert payments to dollars without penalty. The experiment didn’t fail-it evolved. But it also revealed a hard truth: making something legal doesn’t make it useful.China’s Crypto Crackdown: Total Ban, Underground Demand
While El Salvador embraced Bitcoin, China shut it down. In September 2021, the State Council declared all crypto transactions illegal financial activities. Mining operations were shut. Exchanges were blocked. Wallets were banned. By 2025, Chinese authorities had shut down over 12,450 websites and apps tied to crypto. The Cyberspace Administration claims 98.7% success in blocking access to offshore exchanges. Yet crypto didn’t disappear-it went underground. Chainalysis estimates Chinese citizens still hold $120 billion in crypto through peer-to-peer trades and offshore wallets. USDT dominates this shadow market, making up 82% of P2P stablecoin volume. Users rely on VPNs, decentralized exchanges, and even Telegram bots to trade. Transaction costs have risen 22% since 2023 because of the extra layers needed to hide activity. China’s real answer to crypto isn’t repression-it’s replacement. The People’s Bank of China has pushed its digital yuan (e-CNY) hard. By mid-2025, over 1.8 trillion yuan ($250 billion) had moved through e-CNY, used by 260 million accounts. That’s 18.3% of all retail payments in China. Unlike Bitcoin, e-CNY is fully controlled by the state. Every transaction is traceable. No anonymity. No volatility. No decentralization. It’s not a response to crypto-it’s the opposite of crypto.
The Middle Path: How the EU Got It Right
While El Salvador and China took polarized routes, the European Union carved out a third way. MiCA-Markets in Crypto-Assets-became fully enforceable in January 2025. It doesn’t ban crypto. It doesn’t force adoption. It regulates it. Under MiCA, every crypto exchange, wallet provider, and token issuer must be licensed. They need €150,000 in capital. They must store assets securely. They must publish clear white papers. Stablecoins like USDC and EURC must prove they hold enough reserves to back every coin. Algorithmic stablecoins? Banned. That’s not a restriction-it’s a safety net. The results? 24 of the EU’s 27 member states already comply. Firms like Coinbase and Kraken have built EU headquarters to meet the rules. Investors feel safe. Startups have clarity. And consumers? They get protection without losing access. MiCA isn’t perfect. It doesn’t yet cover DeFi or staking fully-that’s coming in MiCA II by 2026-2027. But it proves you don’t have to choose between a free-for-all and a total ban. You can build rules that let innovation thrive while keeping the system stable.The Rest of the World: A Patchwork of Rules
Outside these three models, the world is a patchwork. The U.S. is a mess-fragmented between the SEC, CFTC, and state regulators. The SEC filed 203 enforcement cases in 2024, up 37% from the year before. Meanwhile, the new GENIUS Act requires stablecoins to be backed 1:1 by U.S. dollars, but leaves a loophole for algorithmic ones. The UK moved faster. Its Cryptoassets Order 2025 gave the FCA direct control over exchanges and custody services. 117 firms are already registered. Nigeria banned crypto ads but lets licensed exchanges operate. India slapped a 30% tax on crypto gains but still became the third-largest crypto market by volume. Even in countries with restrictions, adoption doesn’t vanish. El Salvador ranks 17th in grassroots crypto use. China ranks 29th. But India, Pakistan, and Vietnam are all ahead. Why? Because people want control over their money. Regulations can slow it down, but they can’t stop it.
What’s Next? The Future of Crypto Policy
By 2027, most countries will have licensing systems for crypto firms. The Financial Stability Board’s 2025 report says 78% of jurisdictions are already moving that way. The real challenge isn’t whether to regulate-it’s how to do it across borders. China’s ban pushes users to DeFi protocols. Bitcoin City’s bonds rely on global investors. MiCA’s rules affect U.S. and Asian firms operating in Europe. The Global Financial Innovation Network saw a 34% jump in cross-border enforcement actions between 2023 and 2025. No country can isolate itself anymore. The next big shift will come from CBDCs-central bank digital currencies-interacting with crypto. Will they compete? Will they coexist? Will governments allow citizens to hold both a state-backed digital dollar and a Bitcoin wallet? The answer will define the next decade of finance.Lessons from the Frontlines
El Salvador’s story teaches this: you can’t legislate adoption. People need trust, stability, and ease of use-not slogans. China’s story teaches this: you can’t ban demand. If you shut down one channel, users find another. And the EU’s story teaches this: regulation isn’t the enemy of innovation. Clear, fair rules are its best friend. The future of crypto policy won’t be about choosing between El Salvador and China. It’ll be about building systems that protect users, prevent fraud, and let innovation grow-not by forcing people to use crypto, but by letting them choose it safely.Is Bitcoin really legal tender in El Salvador?
Yes, Bitcoin is legal tender in El Salvador alongside the U.S. dollar, as mandated by the Bitcoin Law passed in September 2021. However, in practice, most businesses convert Bitcoin to dollars immediately due to price volatility, and only 28% of merchants accept it directly as of late 2024.
Can you still use Bitcoin in China?
No, Bitcoin trading, mining, and exchange services are banned in China. All domestic crypto platforms were shut down by 2021. However, an estimated $120 billion in crypto assets are still held by Chinese citizens through offshore exchanges, peer-to-peer trades, and decentralized platforms using VPNs.
What is MiCA and why does it matter?
MiCA (Markets in Crypto-Assets) is the European Union’s comprehensive crypto regulation, fully in effect since January 2025. It requires all crypto firms to be licensed, hold capital reserves, and disclose risks. It bans risky algorithmic stablecoins and enforces transparency. MiCA matters because it’s the first unified, investor-friendly crypto rulebook in the world-and it’s already shaping how global firms operate.
Why is China pushing the digital yuan instead of allowing crypto?
China sees decentralized cryptocurrencies as a threat to financial control and monetary sovereignty. The digital yuan (e-CNY) gives the state full visibility into every transaction, eliminates cash anonymity, and allows direct monetary policy control. Unlike Bitcoin, e-CNY can’t be mined, isn’t volatile, and can’t be used to bypass capital controls.
Are crypto regulations getting stricter or looser globally?
Globally, regulations are becoming more structured-not necessarily stricter. The trend is toward licensing, transparency, and consumer protection. Countries like the U.S. and UK are moving toward clearer rules, while places like Nigeria and India are creating legal pathways for exchanges. The era of total bans or wild west experimentation is fading. The future belongs to regulated integration.
Sheetal Srivastava
November 25, 2025 AT 22:05Let’s be real-MiCA is just regulatory theater wrapped in EU bureaucracy. The capital requirements, white papers, reserve proofs-it’s all performative compliance for institutions that already have lawyers on retainer. Meanwhile, the real innovation? DeFi protocols operating on zero-knowledge rollups, unlicensed, unregulated, and unstoppable. You can’t regulate what’s permissionless. The EU thinks it’s building a cage, but it’s just painting the bars gold while the animals are already out in the wild.
And don’t get me started on ‘stablecoins’-if you’re not using a decentralized, overcollateralized model like DAI, you’re just issuing IOUs with a fancy API. MiCA banning algorithmic stablecoins? That’s not protection, that’s fear masquerading as policy.
Meanwhile, China’s e-CNY? A surveillance tool disguised as progress. No anonymity? No freedom. It’s not digital money-it’s digital servitude. And El Salvador? At least they tried to give people agency, even if it failed. The EU just wants to control the narrative. We’re not here to be regulated. We’re here to be free.
Bhavishya Kumar
November 27, 2025 AT 04:25It is imperative to note, with due diligence, that the legal tender status of Bitcoin in El Salvador, while formally enacted, remains functionally inert in the majority of economic transactions. The empirical data cited-namely, the 28 percent merchant adoption rate-underscores a critical disjunction between legislative intent and practical utility. Furthermore, the volatility-induced depreciation of the nation’s Bitcoin holdings constitutes a material fiscal risk, one which, by any conventional accounting standard, would be deemed irresponsible.
Conversely, the People’s Republic of China’s regulatory posture, though ostensibly repressive, is predicated upon a coherent monetary sovereignty framework. The digital yuan, as a centralized, programmable instrument, enables precision in monetary policy transmission, which is absent in decentralized systems. The notion that ‘demand cannot be banned’ is a romantic fallacy; demand is shaped, not merely suppressed, by institutional architecture.
It is therefore not a matter of moral superiority, but of systemic coherence. MiCA, while commendable in its structure, remains a regulatory patchwork that fails to address the ontological conflict between state-issued currency and decentralized ledger technology.
ujjwal fouzdar
November 29, 2025 AT 01:33Imagine this: a kid in Mumbai, 17 years old, scrolling through Telegram at 2 a.m., buying USDT with his lunch money because his dad’s salary got frozen by a bank that doesn’t trust him. That’s not ‘underground crypto’-that’s human resilience. China thinks it’s winning by banning Bitcoin? Nah. It’s just pushing the revolution into the dark corners where the real people live.
And El Salvador? They didn’t fail-they exposed the lie. The world says money is about trust. But trust isn’t built by laws. It’s built by people who believe they can keep what they earn. When your government takes your money, you don’t need a bank-you need Bitcoin.
MiCA? It’s the corporate version of ‘I’ll let you play, but only if you wear the right shoes.’
And the digital yuan? It’s not money. It’s a leash with a tracking chip. They don’t want you to have money. They want you to have permission.
And guess what? The kids in Vietnam, Nigeria, India-they’re not waiting for permission. They’re already building their own economies. And you? You’re still arguing about regulation like it’s a debate club. Wake up. The future isn’t regulated. It’s peer-to-peer.
And it’s already here.
Anand Pandit
November 29, 2025 AT 17:06Really appreciate this breakdown-it’s easy to get caught up in the hype or fear around crypto, but this lays out the real human stories behind the policies. El Salvador’s struggle shows that technology alone doesn’t change behavior; trust does. And China’s crackdown? It’s a reminder that control and convenience aren’t the same thing.
But MiCA? Honestly, this is the model the rest of the world should be copying. Clear rules, investor protection, no shady stablecoins-it’s not about stopping innovation, it’s about making sure it doesn’t crush ordinary people. And the fact that Coinbase and Kraken are setting up shop in the EU? That’s proof it works.
For anyone worried about regulation killing crypto: think of it like seatbelts. They don’t stop you from driving, they just make sure you don’t die trying. We need more of that, not less.
Reshma Jose
November 30, 2025 AT 23:05Okay but why are we still pretending China’s ban is working? I know people in Shanghai who trade crypto through friends who use VPNs and cash apps. It’s not underground-it’s just normal now. And the digital yuan? It’s like paying with your phone but your boss can see every coffee you bought.
Meanwhile in India, everyone’s just using P2P. No exchange, no hassle. 30% tax? Whatever. People still trade. Because money is power, and no government can take that away if you’re smart.
Also-Bitcoin City? Sounds like a theme park for crypto bros. But hey, at least they’re trying. Unlike some countries that just block everything and call it ‘security.’
rahul shrimali
December 2, 2025 AT 20:21El Salvador tried
China banned
EU regulated
Everyone else just did it anyway
Case closed
Eka Prabha
December 4, 2025 AT 16:47Let’s not pretend this is about finance. This is a power play. The EU wants to control the narrative. China wants to control your life. El Salvador? A puppet for Wall Street’s pet project. And you think this is about freedom? Wake up.
Every ‘regulation’ is just a backdoor for surveillance. MiCA’s licensing? That’s how they track you. The digital yuan? That’s how they punish you. Bitcoin? That’s what they want you to fear.
And the real truth? The central banks are all working together. The IMF, the BIS-they’re building a global digital currency system. You think your crypto wallet is safe? It’s just a stepping stone. One day, you won’t be able to hold Bitcoin at all. They’ll force you into the system.
They’re not regulating crypto. They’re eliminating it. Slowly. Quietly. With compliance forms.
Bharat Patel
December 6, 2025 AT 02:40There’s a deeper question here, and no one’s asking it: What is money, really?
Is it a tool for control? Then China wins.
Is it a tool for liberation? Then El Salvador wins.
Is it a tool for stability? Then the EU wins.
But what if money is none of those things? What if it’s just a shared story we all agree to believe in? Bitcoin doesn’t have value because it’s scarce. It has value because millions believe it does. The digital yuan doesn’t have power because it’s state-backed-it has power because the state says so, and people obey.
Maybe the real revolution isn’t in the tech. Maybe it’s in the willingness to stop believing the stories governments tell us about money.
And maybe, just maybe, the future belongs to those who stop asking for permission to believe in something better.
Bhagyashri Zokarkar
December 7, 2025 AT 17:44okay so like el salvador tried to do bitcoin and like everyone was like wow so cool but then like the price dropped and like people just kept converting it back to dollars and honestly like who even uses bitcoin to buy tacos anyway
and china just like blocked everything but like everyone still trades it through like random telegram bots and its like so funny because the government is like we banned it and the people are like yeah sure we’ll just use a vpn lol
and miica? like the eu just made a bunch of rules so like the big exchanges can pay lawyers and still make money but like the little guys? they dont care
and the digital yuan? its literally just a spy app that pays you
and india? they tax it 30% and still have like the third biggest market?? like people just dont care what the government says if they want to get rich
so like the real story is not about laws its about people wanting control of their money and no one can stop that
also i think bitcoin city is just a tourist trap but idk i never been there
Rakesh Dorwal
December 7, 2025 AT 23:04India should follow China’s lead. Crypto is a Western weapon to drain our savings. Every rupee sent to offshore exchanges is a rupee lost to our economy. The 30% tax? Too soft. We should ban it completely. Let people use the digital rupee-built by Indian engineers, for Indian people.
El Salvador? A pawn. The US pushed Bitcoin on them to create a loophole for capital flight. MiCA? Just another way for Europe to control global finance.
Our sovereignty is not for sale. Not to crypto bros. Not to Wall Street. Not to the IMF.
India’s future is in the digital rupee. Strong. Secure. Sovereign. And free from foreign influence.