El Salvador’s Vice President Felix Ulloa flaunted the country’s Bitcoin reserves as evidence that the country is a model for financial freedom and a digital economy. Ulloa made this statement in a recent discussion with Chinese Ambassador Zhang Yanhui.
According to a post on X, Ulloa mentioned the country’s Bitcoin reserves, which currently hold over $500 million worth of Bitcoin, during a meeting with Yanhui. The meeting focused on strengthening the ties between the two countries and strategies that have made El Salvador a model for economic development and innovation.
Ulloa attributed the success of the Bitcoin policy to The National Bitcoin Office of El Salvador and the country’s president, Nayib Bukele, noting that the innovative approach has proven transformative for the country.
He said:
“The President does not stay in his comfort zone. He has shown that, even if everyone says it cannot be done, it is always possible to transform the country for the benefit of its people.”
Meanwhile, the discussions on the El Salvador – China relationship also focused on other issues, including air and digital connectivity. According to the vice president, the country is building its digital infrastructure to become the region’s leader in connectivity and technology.
El Salvador plans to double down on its Bitcoin policy
El Salvador’s pride in its Bitcoin policy is unsurprising, given how the investment has yielded sizable profits for the country. When it first embraced Bitcoin in 2021, the idea of a sovereign nation buying Bitcoin for its reserves was entirely out of the box, and many raised concerns about how this could further damage its economy.
However, the country’s decision to ignore naysayers has proven wise, with Bitcoin rising significantly this year and reaching $100,000 for the first time. Although the asset has now dropped to $94,000, the country remains in the green on its Bitcoin acquisition.
It has decided to double down on its Bitcoin acquisition strategy, with Bukele reportedly having an interim target of adding 20,000 BTC to its current stash. Signs of increased acquisition are already evident as Arkaham Intelligence data shows that El Salvador has bought 11 Bitcoins at once twice in the past week. This is more than its usual purchase of 1 BTC daily.
Interestingly, the success of its Bitcoin strategy and other economic and social policies has also improved its fiscal situation, allowing the country to access International Monetary Fund (IMF) financing. El Salvador recently reached a deal for a $3.5 billion loan from the IMF and other international organizations.
Countries FOMO into Bitcoin as calls for US adoption grow
The relative success of El Salvador’s Bitcoin policy and the rise in value have led to speculation that more sovereign states will adopt Bitcoin as a reserve asset. Leading the pack is the US, where many stakeholders are already debating the possibility.
According to VanEck analysts, the US is creating a strategic Bitcoin reserve based on the BITCOIN Act proposed by Senator Cynthia Lummis. This reserve could hold 36% of the US debt in 2050, strengthening the US dollar. However, there are concerns about whether Congress will okay a law making Bitcoin a reserve asset.
In response, experts at the Bitcoin Policy Institute believe there might be no need for a change in the law for the US to purchase Bitcoin. They claim that the US Treasury, through the Secretary of the Treasury, could use the Exchange Stabilization Fund (ESF) to buy Bitcoin with the President’s approval.
While debates continue to rage in the US over whether the government can buy or make Bitcoin a reserve asset, the Kingdom of Bhutan in South Asia has acquired most of its Bitcoin through mining and currently holds over 12,000 BTC. Others, such as the US, China, the United Kingdom, and Ukraine, also hold BTC, which they acquired through seizures and donations.
Nevertheless, no major country has adopted Bitcoin as a reserve asset. However, reports have emerged that several countries, including Russia and Middle Eastern countries, are also considering it.
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