Chiming in a little late but happy to try to clarify a few issues here

1) El Salvador law may in fact enable US taxpayers to claim bitcoin is a foreign currency.

2) Some of the law cited about what foreign currency is is irrelevant. For tax law we have to stay within Title 26.

3) Section 988 would exempt $200 of personal use gain from taxation. BUT if you go that route then all bitcoin gains above that amount would be ordinary income and NOT capital gain. Big tax rate difference there. so be careful what you wish for.