El Salvador’s President Nayib Bukele is encouraging foreigners to visit his country, promoting it as the “new land of the free.” Bukele tweeted a vintage American poster highlighting the various benefits the nation has to offer its citizens. Among these is the adoption of Bitcoin as legal tender.
El Salvador as the New (Crypto) Paradise?
Bukele’s poster features a traditional American family in a living room setting, celebrating the achievements of his government. The highlights of this progress are in the areas of security and economic policy. The poster also mentions El Salvador being the first country to accept Bitcoin as a legal currency for residents and tourists.
This was an ideal opportunity to emphasize El Salvador’s stellar weather and beaches. Bukele claims these resources have helped the country recover from the Covid-19 pandemic by allowing tourists back in. He has made significant investments in El Zonte Beach, nicknamed Bitcoin Beach, allocating $203 million to build infrastructure such as bridges, bicycle roads, and a drainage system.
The Crypto Angle
Nayib Bukele caused a stir with his decision to make Bitcoin a legal tender in the country. Many parties questioned and fretted over the potential dangers of this choice. On November 18, 2022, he declared through Twitter that the government would begin buying one Bitcoin daily.
How is this going in a tumultuous 2023? El Salvador’s bet on cryptocurrency is starting to pay off.
The small Central American nation made headlines in 2021 when it passed crypto-friendly legislation. The law made it mandatory for all businesses within the country to accept Bitcoin as payment for services and goods. This gives the digital asset the same status as traditional fiat currencies.
Chivo Wallet, the wallet developed by the government of El Salvador, stated that 2.2 million Salvadorans had registered just one month after Bitcoin became lawful tender. To motivate implementation, every user who downloaded the app was given $30 in Bitcoin. Nearly half of the nation’s residents had downloaded the app by early 2022.
Several critics expressed concerns about the probable risks resulting from using cryptocurrency as a legal tender. The International Monetary Fund (IMF) recently discharged a statement on El Salvador’s decision to accept Bitcoin as legal tender, warning against potential risks associated with such sanction.
The IMF also accentuated the importance of transparency when dealing with cryptocurrency transactions. It further stressed that it is essential for regulators to remain consistent with anti-money laundering laws and regulations. It also advised El Salvador to create powerful supervisory frameworks to mitigate cryptocurrency use risks.
A Path of Progress
Untroubled by IMF’s advice, El Salvador’s congress passed a digital securities law in January 2023. This paved the way for the country to raise funds by distributing the world’s first sovereign blockchain bond. The law permits the utilization of blockchain technology in several crucial areas. These steps forward could bring in capital from tech-savvy investors in search of new opportunities in the cryptocurrency market.
El Salvador’s tremendous success in the crypto sector is proof crypto isn’t dying anytime soon. It also highlights the benefits this industry has to offer with proper implementation and regulations. Undeniably, the US market is facing challenges within this industry. Yet, despite all the negative press, the Binance lawsuit, the FTX collapse, and an influx of government regulations, Bitcoin is on the rise. It has been over four months since the implosion of FTX, but millions have remained invested in digital currency regardless of the controversy.
Moreover, since most of these investments were a “discount” to Bitcoin’s current price of more than $28,000, it is easy to see which direction the pendulum is swinging in.
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