El Salvador, the first country to recognize Bitcoin as a legal tender, is furthering its commitment to promote the use of cryptocurrencies. The country is set to open a new Bitcoin embassy in Texas, following the successful establishment of two embassies in El Salvador.
El Salvador: Bitcoin’s biggest fan
El Salvador’s adoption of Bitcoin has been a significant accomplishment, showcasing the country’s progressive policy and President Nayib Bukele’s efforts to establish the country as a leader in Bitcoin adoption on an international scale.
The government has been working hard to provide a blueprint for Bitcoin adoption that other countries can follow, with the establishment of two Bitcoin embassies being a crucial part of this process.
The Bitcoin embassies have been strategically placed to build trade relations with key financial centers interested in Bitcoin adoption. Texas is an attractive location, serving as the hub for the US Bitcoin mining sector and attracting many companies after China’s ban on Bitcoin mining in 2021.
Reports suggest that in 2022, over a quarter billion dollars will be exchanged in commerce between Texas and El Salvador. The Bitcoin embassies will serve as the first Cryptocurrency Chambers of Commerce, promoting the use of cryptocurrencies beyond their respective regions and initiatives that promote the interaction of academics and talents across El Salvador and Lugano.
El Salvador, with a population of over 6 million people, has been at the forefront of promoting Bitcoin adoption, with over 500,000 Salvadorans downloading the government’s Chivo wallet.
The government has also installed over 200 Bitcoin ATMs across the country. However, the adoption of Bitcoin has not been without its challenges, with the significant drop in Bitcoin’s value after adoption leading some businesses to stop accepting it as payment.
Bukele’s leadership in promoting Bitcoin adoption has faced opposition from investors and conventional financiers such as the International Monetary Fund (IMF), with the country’s bond prices tumbling in mid-2021 after Bukele’s dictatorship-like actions, such as firing judges and brutal crackdowns. Moody’s even downgraded the country’s debt into junk territory.
Despite these challenges, Bukele’s leadership and the government’s efforts to promote Bitcoin adoption have paid off, with El Salvador leading Citi’s emerging market sovereign bond index as the top outperformer year to date, with returns of 22.2%. Moody’s outlook has also changed from negative to stable, citing a decreased risk of a credit event in the near term.
New crypto regulation laws
Alongside Bitcoin adoption, El Salvador has passed a law to regulate the issuance of digital assets by both private and state entities. The law aims to attract national and foreign investors while creating new financing opportunities for citizens, companies, and the government.
The 47-article law has been approved by 62 votes in Congress out of 84 seats. It provides a legal framework that grants legal certainty to transfer operations to any title of digital assets used in public issuance offers.
The law also establishes the National Commission for Digital Assets and the Bitcoin Funds Administration Agency, which will manage, safeguard, and invest the funds from public offerings of digital assets carried out by the government.
The provisions of the law do not apply to digital currencies issued by central banks of any country or territory or digital assets that by law are legal tender, such as Bitcoin.
