el salvador

Is El Salvador’s Bitcoin gambit finally paying off?

The rise in El Salvador’s bond prices “almost defies gravity,” and it may soon have access to Eurobond markets, said Santander Bank.

El Salvador’s controversial $117.5 million Bitcoin investment briefly swung into profitability this past week for the first time in two years. 

This was a milestone of sorts because, until then, not much had gone right crypto-wise for the impoverished Central American nation.

El Salvador still hasn’t come close to making Bitcoin (BTC) a medium of exchange as was anticipated when it made Bitcoin legal tender in September 2021, the world’s first nation to take such a step.

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Argentine crypto influencers hope Javier Milei will shun FATF Travel Rule

The Argentine president, inaugurated on Dec. 10, has promised to disband the country’s central bank but hasn’t made any official commitment to introduce Bitcoin-friendly legislation.

After libertarian Javier Milei was sworn in as president of Argentina on Dec. 10, the local crypto community hopes he will keep some of his promises and take the country to the same level of crypto adoption as his counterpart Nayib Bukele did in El Salvador. 

On the day of his inauguration, Latin American outlet Cryptonoticias published “Three requests to Milei from the Bitcoin (BTC) community.” The vice president of the non-governmental organization Bitcoin Argentina, Camilo Jorajuría, called for Milei to respect the privacy of his people and not introduce the “Draconian measures” of the Financial Action Task Force (FATF).

Related: Milei vowed to close Argentina’s central bank — But will he do it?

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El Salvador unveils BTC ‘Freedom Visa’ — but it’s 10x the cost of others

The same citizenship-by-investment schemes in nearby Caribbean nations start at $100,000, and one EU country has a citizenship pathway for just over $800,000.

El Salvador has launched a new citizenship-by-investment program that grants a residency visa and pathway to citizenship for 1,000 people willing to stump up a $1 million Bitcoin (BTC) or Tether (USDT) investment in the country.

The Central American country’s price tag for citizenship, however, appears far more expensive than those in neighboring Caribbean countries, which start at $100,000.

El Salvador’s government and stablecoin issuer Tether announced the program on Dec. 7, dubbed the “Adopting El Salvador Freedom Visa Program.”

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El Salvador’s Bitcoin portfolio swings to profit

The country’s Bitcoin investment has returned to profit after a devastating crypto winter.

According to a Dec. 4 post by Salvadoran President Nayib Bukele, the country’s cumulative Bitcoin (BTC) investments currently amount to $131 million with a net profit of $3.6 million, for a total gain of 2.84%.

“Of course, we have no intention of selling; that has never been our objective,” said Bukele.

On Dec. 1, Bukele resigned as the president of El Salvador following approval from the country’s legislative assembly, allowing him to take a leave of absence to focus on his 2024 reelection campaign.

Despite this, Bukele continued to dollar-cost-average the country’s Bitcoin investments, making repeated purchases throughout 2022. At one point in time, the country’s Bitcoin portfolio fell as low as $45 million from a book value of $103.9 million.

In 2021, El Salvador became the first country to adopt Bitcoin as legal tender. The International Monetary Fund has since warned that Bitcoin’s risks to El Salvador have “not materialized” due to limited adoption in the country.

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Nayib Bukele steps down as El Salvador’s President ahead of re-election bid

Acting President Claudia Rodríguez de Guevara, the first female head of state for El Salvador, took office on Dec. 1 and is expected to serve until June 2024.

El Salvador President Nayib Bukele, who was behind legislation recognizing Bitcoin (BTC) as legal tender in the country, has stepped down from office to campaign.

On Dec.

“Current state of democracy in El Salvador: the office of the President of the Republic will be occupied by a person for whom no one has ever voted,” said Héctor Silva, candidate for the mayor’s office of San Salvador, on X.

Bukele, who first took office in June 2019, quickly became known for his attempts to reduce the homicide rate in El Salvador — one of the highest in the world at the time — as well as his pro-crypto policies. He advocated for the Salvadoran government to adopt Bitcoin as legal tender in September 2021 and pushed for the creation of a volcano-powered ‘Bitcoin City’ in the country.

Related: Salvadoran pro-Bitcoin President Nayib Bukele launches reelection bid

Though the homicide rate under Bukele has dropped significantly, many critics have pointed to El Salvador violating laws on human rights in its attempts to crack down on gang activity.

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El Salvador removes all taxes related to tech innovation for economic growth

Technology innovations such as software programming, coding, apps and AI development, and computing and communications hardware manufacturing will be exempted from taxes in El Salvador.

El Salvador, the first country to establish Bitcoin (BTC) as a legal tender, has decided to eliminate all taxes on technology innovations. The move runs parallel to establishing the National Bitcoin Office (ONBTC) of El Salvador, also known as “the Bitcoin office.“

When legalizing Bitcoin on Sept. 7, 2021, Salvadoran President Nayib Bukele saw the technology as a means to counter hyperinflation and dependence on the U.S. dollar. Over the past 18 months, El Salvador restrategized Bitcoin investments and utilized capital gains in numerous instances to rebuild the nation.

Moving ahead with the strategy, Bukele believed in winding down tax requirements to expedite technological development. As promised, on April 1, Bukele officially sent a bill to Congress — effectively eliminating all income, property, and capital gains taxes on technology innovations “such as software programming, coding, apps and AI development, as well as computing and communications hardware manufacturing.”

Supporting this initiative is the establishment of the Bitcoin office, a regulatory body for conducting joint initiatives with Bitcoin entrepreneurs and companies. According to Asociación Bitcoin de El Salvador (Bitcoin Association of El Salvador), ONBTC aims to “position the country in the world as a technological and economic power.”

In addition to attempting a financial comeback, Bukele’s ongoing efforts to reinvent El Salvador include promoting tourism, countering terrorism and building regional business hubs.

Related: El Salvador’s Bitcoin strategy evolved with the bear market in 2022

At the start of 2023, El Salvador passed legislation providing the legal framework for Bitcoin-backed bonds — Volcano Bonds.

The terminology of the Volcano Bonds is derived from Bitcoin City’s location, which is set to become a renewable crypto-mining hub powered by hydrothermal energy from the nearby Conchagua volcano.

Magazine: What it’s actually like to use Bitcoin in El Salvador

IMF exec board endorses crypto policy framework, including no crypto as legal tender

The principles are broad and general, with the exception of the stand against crypto as legal tender, which the IMF has repeatedly expressed to El Salvador.

The executive board of the International Monetary Fund (IMF) has assessed a paper on crypto asset policy published by the fund and expressed its agreement with its proposed policy framework. The paper, titled “Elements of Effective Policies for Crypto Assets,” developed a framework of nine policy principles that addressed macrofinancial, legal and regulatory, and international coordination issues. 

The proposed principles were mainly quite broad, emphasizing analysis, monitoring and guarding. The paper explicitly says the proposals should be taken up by “the Directors.” The first principle did contain a concrete injunction, reading:

“Safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status.”

The executive board expressed its agreement with the proposals in the paper and specifically endorsed its position on crypto as legal tender, saying members “generally agreed” with it. The board also repeated the principle of “same activity, same risk, same regulation” and “emphasized that the Fund could serve as a thought leader in further analytical work” on crypto assets.

The paper was dated January 2023, and the executive board met to discuss it on Feb. 8, but the paper and the meeting were made known to the public on Feb. 23.

Related: IMF calls for tighter crypto regulation in Africa as the industry unfolds

The IMF has made its opposition to the use of crypto as legal tender well known, especially since El Salvador adopted Bitcoin (BTC) as its official currency in September 2021. Its latest statement on El Salvador was released on Feb. 10 and was panned by the crypto community. The fund has also urged the adoption of greater crypto regulation.

The IMF looks at central bank digital currency more favorably than cryptocurrency. It announced in September that it was working on an interoperable CBDC platform.

Paying the way for Bitcoin adoption in El Salvador: Video

What is Bitcoin adoption like on the ground as peer-to-peer cash in the home of Bitcoin worldwide? Cointelegraph visits El Salvador to find out!

The Bitcoin (BTC) white paper title describes Bitcoin as a “peer-to-peer electronic cash system.” So how is Bitcoin being used as a means of exchange, or electronic cash, in the first country to adopt Bitcoin? 

Reporter Joe Hall spent a few weeks in El Salvador attempting to live off Bitcoin and Bitcoin only. He documented his trials, tribulations, successes and satoshis (the smallest amount of a Bitcoin) in a video for Cointelegraph’s YouTube channel:

Headlines from El Salvador within the crypto community have been largely positive. Moreover, statistics emanating from the country have been abundantly positive; tourism is up 30%, crime and the murder rate in El Salvador have decreased dramatically, and the Bitcoin bonds project is underway in 2023.

Nonetheless, while Bitcoin is undoubtedly one of the best-known brands worldwide; and a marketing tool that appeals to a pool of ardent Bitcoin believers around the world, its use as a means of exchange is often questioned. In El Salvador, it’s no different, as Hall explains.

Some Salvadoran vendors are laser-eyed hodlers; others made their first Bitcoin payment with Hall and were keen to ask questions and learn more.

Tipping Henry the delivery guy in Bitcoin to his Chivo wallet at 2 am. Source: Cointelegraph

Hall was surprised, dismayed, entertained and ultimately enthused by his findings in the country. Adopting a new technology as novel and misunderstood as Bitcoin is a mammoth task, but Salvadorans are getting stuck into the new technology where possible.

Retailers like Walmart had the option to pay in Bitcoin — but the process was slow and inconvenient — while the likes of Texaco were staunchly anti-Bitcoin. At McDonald’s, the experience is smooth and fast; it’s even quicker than the McDonald’s branches that accept Bitcoin in Switzerland.

From the Adopting Bitcoin conference — a Lightning conference in San Salvador that gathered Bitcoiners from around the world — down to Bitcoin Beach and Surf City, across to the volcanoes of Santa Ana and on the streets of San Salvador, Hall mingled with locals to get a better sense of Bitcoin as a means of exchange.

Related: El Salvador’s Bitcoin strategy evolved with the bear market in 2022

Hall attended the “My First Bitcoin” educational graduation ceremony at a school in El Pacheco. The founder, John Dennehy, was recently interviewed by Cointelegraph. Dennehy explained the group’s plan to remedy Bitcoin education in El Salvador by teaching teenagers how to Bitcoin.

Indeed, the recent graduates Hall interviewed at the school grasped the fundamental tenets of Bitcoin and expressed their belief that Bitcoin represents hope for the future. Watch the video to find out more.

El Salvador to open a ‘Bitcoin Embassy’ in the United States

After debuting a Bitcoin Embassy in Switzerland’s city of Lugano, El Salvador continues expanding its BTC strategy with a new partnership with Texas.

The world’s biggest cryptocurrency, Bitcoin (BTC), is connecting more countries as the government of El Salvador is opening a “Bitcoin Embassy” in the United States.

El Salvador, a country that adopted Bitcoin as legal tender in 2021, is expanding its Bitcoin strategy in a new partnership with the government of Texas. The intergovernmental collaboration aims to set up a Bitcoin Embassy, or El Salvador’s representative office, in Texas to work on new joint projects to promote Bitcoin adoption.

Milena Mayorga, the Salvadoran Ambassador to the United States, announced the news in a statement on Twitter on Feb. 14.

Texas Deputy Secretary of State Joe Esparza and El Salvador’s U.S. ambassador Milena Mayorga. Source: Twitter

“In my meeting with the assistant secretary of the government of Texas, Joe Esparza, we discussed the opening of the second Bitcoin Embassy and the expansion of commercial and economic exchange projects,” Mayorga said.

The latest Bitcoin initiative comes a few months after El Salvador opened the first Bitcoin Embassy in Switzerland’s southern city of Lugano in October 2022. As part of the efforts, the two pro-crypto jurisdictions started working to establish a physical governmental presence to promote cooperation in education and research institutions related to Bitcoin.

According to former Blockstream chief strategy officer Samson Mow, the phenomenon of the Bitcoin embassy is the next step in nation-states and cities adopting Bitcoin. He said that such initiatives imply cooperation between countries to develop new initiatives like establishing alliances between places that have adopted Bitcoin.

Related: El Salvador’s ‘limited’ use of Bitcoin prevents forecasted risks, says IMF

The news comes amid Texas lawmakers reportedly considering a new bill calling for a “a master plan for the expansion of the blockchain industry.” The legal initiative aims to turn Texas into the crypto capital of the country by introducing tax-free shopping with Bitcoin, among other proposals.

As previously reported, Texas has emerged as one of the crypto-friendly U.S. states, passing crypto-friendly laws aiming to better adapt commercial laws to blockchain innovation and digital asset regulations. Texas is also home to some of the largest Bitcoin miners in North America, with major mining companies like Riot Blockchain, Core Scientific and Genesis Digital Assets operating in the state.

Sri Lanka against Bitcoin adoption, rejects Draper’s anti-corruption pitch

Central bank Governor Nandalal Weerasinghe believes that adopting decentralized cryptocurrencies would worsen the country’s economic situation.

On a recent visit to Sri Lanka, American billionaire Tim Draper pitched the idea of adopting Bitcoin (BTC) as a legal tender to fight against the corruption that contributed to hyperinflation in the island country. However, a key Sri Lankan authority — central bank Governor Nandalal Weerasinghe — believed doing so would worsen the country’s economic situation.

Taking time from a TV shoot in Sri Lanka, Draper met President Ranil Wickremesinghe and Weerasinghe to recommend Bitcoin as a viable option for getting out of financial problems.

Tim Draper in Sri Lanka speaking about economic development. Source: YouTube

During the meeting, Draper pointed out a key concern staring right at Sri Lanka:

“Have you seen Sri Lanka in the news? It’s known as the corruption capital. A country known for corruption will be able to keep perfect records with the adoption of Bitcoin.”

As he recommended using “decentralized currency” to the head of Sri Lanka’s central bank, he received a short “we don’t accept” reply. Weerasinghe further stated:

“Adoption of 100% Bitcoin won’t be a Sri Lanka reality ever.”

Instead, Weerasinghe believed that having Sri Lanka’s own fiat currency was critical for monetary-policy independence and would ensure efficient inclusion and disburse electronic welfare payments.

“We don’t want to make the crisis worse by introducing Bitcoin,” Weerasinghe concluded.

Related: Australia introduces classification for crypto assets

MicroStrategy, a software analytics company co-founded by Michael Saylor, shared plans to continue offering BTC trading services despite incurring an unrealized loss of $1.3 billion in 2022.

During a Feb. 2 earnings call, MicroStrategy’s chief financial officer, Andrew Kang, said:

“We may consider pursuing additional transactions that may take advantage of the volatility in Bitcoin prices, or other market dislocations that are consistent with our long-term Bitcoin strategy.”

According to Kang, MicroStrategy held 132,500 BTC (worth $1.84 billion) as of Dec. 31, 2022. Of the lot, 14,890 BTC were held directly by the business and the rest by its subsidiary MacroStrategy.