Five years after El Salvador made Bitcoin legal tender in a bid to change how money moves through its economy, the government is turning to dollar-backed stablecoins for the job. In 2021, Pre
Five years after El Salvador made Bitcoin legal tender in a bid to change how money moves through its economy, the government is turning to dollar-backed stablecoins for the job. In 2021, President Nayib Bukele introduced Bitcoin alongside the U.S. dollar to boost financial inclusion and make remittances easier. But everyday use remained low, and the government later reduced Bitcoin’s legal-tender requirements. Stablecoins offer a way to keep the benefits of digital payments while avoiding Bitcoin’s sharp price swings.
Nayib Bukele’s administration is building a government-backed app with Modveon that will let Salvadorans send and hold digital dollars, including for remittances, using Coinbase’s Base network. The platform, called Sivar, will verify users through government-issued identification before grouping them into communities based on their location and interests.
Salvadorans sent $9B home last year. Percentage fees took millions of it.
@Modveon’s Sivar now uses Coinbase infrastructure and Base to let US users send any amount to El Salvador for a flat $2.
Transfer to off-ramp, all included. https://t.co/a5b2na5lJ0
— Coinbase
(@coinbase) September 29, 2026
El Salvador is not the first small country to test a government-backed digital dollar. Palau, a Pacific island nation with a population of roughly 18,000, launched a pilot for its Palau Stablecoin, or PSC, with Ripple in 2023. The pilot gave 200 government employees 100 PSC each to spend at selected local retailers. Each token was designed to be worth one U.S. dollar and backed 1:1 by reserves.
Palau President Surangel Whipps Jr. said the country’s small size gave it an advantage in testing new financial technology, with the goal of improving financial transactions and government processes. However, Palau’s project was put on hold partly because of difficulties finding a custodian bank, while the IMF has pointed to issues such as reserve management, regulation, cybersecurity and consumer protection.
The Marshall Islands has also looked at using a digital dollar for its small economy. After putting its own SOV digital currency project on hold over financial and regulatory concerns, the country began studying a national digital payment system that could use a U.S. dollar-backed stablecoin. The idea is to improve digital payments while keeping the currency tied to the U.S. dollar, which is already the country’s official currency.
These projects show that small countries are looking at digital dollars for practical reasons, not just as crypto experiments. A government-backed token could make local and cross-border payments faster while giving the government more control over how the payment system works.
Also Read: Japan Moves to Tighten Crypto Rules as Market Expansion Push Continues
The move toward stablecoins is not limited to governments experimenting with new payment systems. In Nigeria, stablecoins are already being used by individuals and businesses to move money across borders. The IMF estimates that stablecoins accounted for more than 65% of Nigeria’s crypto inflows in 2024, while stablecoin inflows into the country made up about 60% of all stablecoin inflows into Sub-Saharan Africa from late 2019 through early 2025. By 2025, Nigeria had an estimated 25.9 million digital-asset users, and dollar-backed USDT and USDC dominated stablecoin activity.
The use is also moving beyond trading. The IMF says Nigerian households use stablecoins for cross-border transfers and remittances, while small importers increasingly use them to pay overseas suppliers. Some larger companies are also testing stablecoins for trade settlement. The attraction is partly the cost and speed: the World Bank puts the average global cost of sending $200 at 6.49%, rising to 8.78% in Sub-Saharan Africa, while stablecoin transfers can cost only a few cents on the blockchain before adding exchange and cash-out fees.
That helps explain why the payment use case is becoming more interesting for smaller and emerging economies. But it also creates a problem for governments. When people hold dollars through stablecoins instead of local bank accounts, the stablecoin can become a digital form of dollarization. The IMF has warned that this could weaken monetary control in countries such as Nigeria.
Meanwhile, El Salvador marked the fourth anniversary of its Bitcoin Law by acquiring an additional 21 BTC, bringing the country’s sovereign Bitcoin reserves to a record 6,313.18 BTC, now valued at approximately $701 million.
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