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Bukele’s Bitcoin trade raises El Salvador’s sovereign credit risk: Moody’s

The credit rating agency believes El Salvador’s Bitcoin experiment has elevated the country’s risk profile and could limit its access to foreign debt markets.

El Salvador’s historic embrace of Bitcoin (BTC) could have negative consequences on the country’s sovereign credit outlook, according to Moody’s Investors Service. 

Moody’s analyst Jaime Reusche told Bloomberg this week that El Salvador’s Bitcoin gambit “certainly adds to the risk portfolio” of a country that has struggled with liquidity issues in the past.

Under the leadership of President Nayib Bukele, El Salvador has recognized Bitcoin as legal tender and issued a state-run crypto wallet to facilitate payments, transfers and ownership. Along the way, El Salvador has amassed a treasure chest of 1,391 BTC, with President Bukele famously “buying the dip” on several occasions by using Bitcoin’s volatility to add to his country’s holdings.

However, Reusche warned that accumulating more BTC would elevate El Salvador’s risk of default. “If it gets much higher, then that represents an even greater risk to repayment capacity and the fiscal profile of the issuer,” he said.

In addition to downgrading El Salvador’s credit rating, Moody’s has warned that the country’s so-called Bitcoin volcano bond could limit its access to foreign bond markets. Proceeds of the volcano bond, which is expected to raise roughly $1 billion, will be used to fund El Salvador's Bitcoin City project. 

Related: Tonga to copy El Salvador’s bill making Bitcoin legal tender, says former MP

Attacks on El Salvador’s Bitcoin gambit by legacy financial institutions are nothing new. In November 2021, the Washington-based International Monetary Fund warned El Salvador against using Bitcoin as legal tender. Meanwhile, the World Bank has rejected the country’s request for assistance in implementing its Bitcoin Law over alleged environmental and transparency concerns.

Nevertheless, El Salvador has remained steadfast in embracing Bitcoin and in creating an attractive environment for crypto investors and entrepreneurs. Last week, finance minister Alejandro Zelaya said the country’s Bitcoin Law has already attracted foreign investment.

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Northwest Arkansas offering $10K in Bitcoin to attract remote workers

“Next-generation talent is essential to further transform our region into a hub for up-and-coming tech innovators and businesses,” said Blockchain Center of Excellence director Mary Lacity.

The Northwest Arkansas Council, consisting of business leaders aimed at promoting development in the region, has announced a crypto incentive program to bring in tech professionals and entrepreneurs willing to work remotely.

In a Wednesday announcement, council president and CEO Nelson Peacock said the area would be looking to expand its range of talent in the tech industry by offering $10,000 in Bitcoin (BTC) — roughly 0.23 BTC at the current price of $43,610 — in addition to a bicycle or membership to arts and cultural facilities. The “Bitcoin and a Bike” program, the next stage of the area’s Life Works Here initiative, is specifically aimed at embracing professionals in blockchain-related fields. The program will offer the crypto incentive to qualifying individuals willing to live for at least a year in Northwest Arkansas — presumably close to the cities of Fayetteville, Springdale, Rogers and Bentonville.

“Northwest Arkansas is one of the fastest-growing regions in the country, and we’re now seeing more explosive growth in our tech sector,” said Peacock.

“This expanded incentive offer [...] not only embraces the growing trend toward the use of cryptocurrency as a payment option by employers, but also helps increase our pipeline of talent to benefit tech employers, startups, cities, local businesses and the region overall.”
Bentonville, Arkansas from above. Source: Northwest Arkansas Council

Among the requirements for applicants are the ability to work remotely, moving to the area within six months of acceptance and two years of experience at their current position in the tech industry. Northwest Arkansas is already home to major retailer Walmart’s headquarters in Bentonville — the Walton Family Foundation is contributing to the Bitcoin and a Bike program and Walmart founder Sam Walton was a founding member of the council — as well as the University of Arkansas’ Blockchain Center of Excellence, offering education in blockchain-enabled tech. 

“Next-generation talent is essential to further transform our region into a hub for up-and-coming tech innovators and businesses,” said Blockchain Center of Excellence director Mary Lacity.

Many reports have seemingly touted Northwest Arkansas as an alternative to growing tech hubs in the United States like Austin, Texas — while the number of businesses in the city has significantly increased in the last year, the growing interest has led to surging rent and housing costs. It may be premature to observe an exodus to the midwest state, but companies including electric vehicle manufacturer Canoo have announced plans to set up headquarters in the state’s northwest region.

Related: Walmart seeks crypto product lead to drive digital currency strategy

Before and during the pandemic, many mid-sized U.S. cities offered similar programs with cash incentives for transplants to work remotely, seemingly in an effort to promote the local economy. The NWA council started the Life Works Here initiative in November 2020, but Tulsa, Oklahoma was one of the first to offer certain individuals $10,000 to move starting in 2018, with areas of West Virginia, Kansas, Vermont, Connecticut, and Alabama following its lead.

Disclosure: this reporter applied for the Bitcoin and a Bike program.

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NYC mayor getting paid in Bitcoin suggests buying the dip

Should Eric Adams accept his first three paychecks in Bitcoin, he would likely acquire more than 1 BTC following the price drop to $42,948.

Newly sworn-in New York City Mayor Eric Adams is already using his influence to publicly speak about buying the recent Bitcoin dip.

In a Thursday interview with CNBC’s Squawk Box, Adams said he had not yet received his first paycheck as the mayor of New York City, but reiterated his aim to make the city a Bitcoin (BTC) and crypto hub. When co-anchor Andrew Ross Sorkin pointed out that the price of the crypto asset has “come down” — dipping as low as $43,000 earlier today — the NYC mayor seemed to be undeterred.

"Sometimes the best time to buy is when things go down, so when they go back up, you made a good profit,” said Adams. “We need to use the technology of blockchain, Bitcoin, of all other forms of technology. I want New York City to be the center of that technology.”

Adams, who has been in office five full days following a November election win, is replacing Bill de Blasio as the mayor of New York City. During his campaign, he pledged to make New York City a tech hub that will be ”the center of cybersecurity, the center of self-driving cars, drones, the center of Bitcoins,” beating out crypto-friendly businessman Andrew Yang to become the Democratic party nominee.

As part of his efforts to promote crypto and blockchain technology — or perhaps inspired by a friendly feud with Miami Mayor Francis Suarez — Adams announced following the election that he planned to take his first three paychecks in BTC. Assuming the NYC mayor accepts a base salary of $258,750, his monthly paychecks would be roughly $21,562 each, a total of 1.51 BTC at a price of $42,948.

Related: Miami mayor plans to accept next paycheck entirely in Bitcoin

New York state is often the center of media attention related to regulation and enforcement for crypto firms in the United States. The New York Attorney General’s office was responsible for a settlement case from Bitfinex and Tether, which in February agreed to pay $18.5 million in damages, as well as ordering Coinseed to close its doors after the firm allegedly defrauded investors out of more than $1 million.

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El Salvador: How it started vs. how it’s going with the Bitcoin Law in 2021

The Latin American nation is still struggling to cope with BTC's volatility when used as a medium of exchange and gaining mainstream understanding and acceptance from its populace.

Before June 2021, news regarding Nayib Bukele was likely not even a blip on many crypto users’ radar screens. The Salvadoran president instead made headlines for allegations of corruption and dictator-like behavior after his party’s congressional majority sacked five members of the country’s Supreme Court and its attorney general.

During the Bitcoin 2021 conference in Miami, however, Bukele stunned many participants and garnered international attention by announcing he planned to have El Salvador adopt Bitcoin (BTC) as legal tender. Within a week, a supermajority of the Salvadoran Legislative Assembly — most members of Bukele’s own party — had passed the Bitcoin Law, requiring all businesses to accept the crypto asset as a form of payment alongside the United States dollar.

Bukele’s involvement in the crypto rollout seemed to extend further than many would have expected from a world leader. The El Salvador president was already active on social media and presented himself differently than many politicians, often casually dressed in a baseball cap and jeans. Since the Bitcoin Law went into effect in September, he has used his Twitter account to announce several BTC buys totaling 1,391 BTC — more than $71 million, presumably from El Salvador’s national treasury. He also proposed having the country tap geothermal energy from its volcanoes to mine crypto.

Locally, opposition to the Bitcoin Law manifested itself in the form of public statements from lawmakers not connected to Bukele’s political party as well as protests in San Salvador. Before the law went into effect on Sept. 7, a group of retirees, veterans, disability pensioners and workers marched through the capital city to voice their concerns about the crypto asset’s volatility and how the Bitcoin Law could potentially affect their pensions. Protesters calling themselves the Popular Resistance and Rebellion Block carried banners saying “No to Bitcoin” in the streets to demand a repeal of the law.

Officials outside Bukele’s sphere of influence also expressed skepticism over the rollout. In June, the U.S. Department of State’s Victoria Nuland encouraged El Salvador to take a “tough look” at Bitcoin to ensure the crypto asset was “well regulated” and “transparent,” and the government offered protection “against malign actors.” The International Monetary Fund issued its own warning in July, saying the consequences of a country adopting Bitcoin as a national currency “could be dire.”

In addition to helping establish the regulatory framework for adopting BTC payments, Bukele promoted efforts to build the infrastructure necessary for Salvadoran merchants and everyday citizens to use crypto. The country is already home to Bitcoin Beach, an area in the village of El Zonte, intended to be an experiment in which Bitcoiners can use crypto to pay for anything, from utility bills to tacos. Officials have also overseen the installation of hundreds of Chivo ATMs, allowing Salvadorans to withdraw cash 24 hours a day without paying commissions on their crypto holdings.

However, one announcement that will likely stand out as the most ambitious of Bukele’s crypto plans in 2021 was for the creation of a Bitcoin City funded initially by $1 billion in BTC bonds. Crypto exchange Bitfinex and Blockstream have already said they plan to support the initiative, which will reportedly aim for no capital gains, income, property or payroll taxes.

The criticism over Bukele governing like an authoritarian has not necessarily been mitigated with the Bitcoin Law rollout, but coverage is often paired with his statements on “buying the dip,” proposing a 24-hour Bitcoin news network, and other crypto-related developments in the country. There is little indication that the president has moved past self-identifying as the world’s “coolest dictator” — a Twitter bio that he later changed to the “CEO of El Salvador.”

Prior to the passage of the Bitcoin Law, police detained a San Salvador resident who had spoken out against the country adopting Bitcoin as legal tender. In October, following several protests against Bukele’s policies, the government banned gatherings, claiming its actions were aimed at preventing the spread of COVID-19 — however, it still listed sports and cultural events as exemptions.

“The crypto community embracing Bukele of all people shows that they need to think a little harder [...] this guy’s an authoritarian who can’t provide basic services to his citizens,” said Tommy Vietor, a political commentator from Pod Save the World. “[El Salvador has] one of the highest murder rates in the world. He seems to think you can get power by plugging your Apple charger into a volcano somehow. Don’t try to sell us on a literal volcano-fueled tech utopia city — let’s just start a little smaller.”

At the end of 2021, it was still unclear whether the average citizen of El Salvador was reaping many rewards from the Bitcoin Law. Bukele did announce in October animals would benefit from crypto with the construction of a $4-million veterinary hospital funded by profits from the country’s Bitcoin trust. However, it’s likely the Latin American nation is still struggling to cope with the crypto asset’s volatility when used as a medium of exchange as well as gaining mainstream understanding and acceptance from its populace. 

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Thailand Doesn’t Prohibit Crypto Use for Payments but Warns of Price Fluctuation

Thailand Doesn’t Prohibit Crypto Use for Payments but Warns of Price FluctuationBank of Thailand’s officials say that using cryptocurrency as a means of payment is not illegal. However, they added that users “must be able to accept the risks,” including price fluctuation. Using Crypto to Pay for Goods and Services Is Not Illegal in Thailand Sakkapop Panyanukul, senior director at the Bank of Thailand (BOT)’s Monetary […]

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Russian Parliament Sets Up Working Group on Cryptocurrency Regulations

Russian Parliament Sets Up Working Group on Cryptocurrency RegulationsA working group on cryptocurrencies and related activities will soon begin to meet at the State Duma, the lower house of Russian parliament. Its members are expected to take on the task of clarifying various regulatory aspects related to digital financial assets such as the legalization of mining and the introduction of taxation. Working Group […]

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The future is Bitcoin according to South Park creators

“It’s the future — we’ve all decided centralized banking is rigged so we trust more in fly-by-night Ponzi schemes,” said the motel clerk accepting Bitcoin as payment.

South Park, the animated TV series that often tackles topical issues with a comedic twist, showed Bitcoin being used as a mainstream means of payment in the not too distant future.

In the “Post COVID” episode of its 24th season which aired Thursday, South Park depicted one of the show’s protagonists, Stan Marsh, paying for a stay in a cheap motel using Bitcoin (BTC) roughly 40 years from now, when the pandemic is jokingly about to end for good. The fictional Super 12 Motel Plus — in a future where nearly all brand names have “plus” and “maxx” included — only accepts “Bitcoin and other cryptocurrency,” with the show having Marsh pay using a plastic card with the BTC logo and a QR code.

“It’s the future — we’ve all decided centralized banking is rigged so we trust more in fly-by-night Ponzi schemes,” said the motel clerk.

Many in the crypto space know South Park for its criticism of the United States government’s and banks’ response following the 2008 financial crisis, popularized by the meme “aaaand... it’s gone” — referring to Marsh losing money immediately after depositing it in a bank. Among the other future predictions in the recent episode are autonomous vehicles, holographic digital assistants and stand-up comedy becoming a shadow of itself amid “woke” culture.

Though referencing cryptocurrency and blockchain in mainstream media is somewhat commonplace now, this wasn’t always the case. The first TV series to feature BTC was The Good Wife in January 2012, but others have gone on to use the emerging technology and financial tool for both comedy and drama. This year, James Spader’s character in The Blacklist claimed to know the true identity of Satoshi, and The Simpsons showed the BTC price moving to infinity on an animated stock ticker feed.

Related: Reality show is casting crypto users locked out of their wallets

Bitcoin's appearance on the popular animated series comes as the price of the crypto asset has stayed mostly under $60,000 for more than a week. According to data from Cointelegraph Markets Pro, the BTC price is $59,237 at the time of publication, having fallen more than 14% since reaching an all-time high of $69,000 on Nov. 10.

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Rams player Odell Beckham Jr. will accept NFL salary in Bitcoin

Reports suggest the Los Angeles Rams player’s total salary for the 2021 season would be worth roughly 75.66 BTC at an average price of $56,103.

Odell Beckham Jr., wide receiver for the Los Angeles Rams football team, has said he will be taking all of his $4.25 million National Football League salary in Bitcoin.

In a Nov. 22 post to his Twitter account, Beckham said he would be partnering with Cash App to take his next NFL salary in Bitcoin (BTC). National Insider reporter Ian Rapoport said earlier this month that Beckham would be earning a $750,000 base salary on top of a $500,000 signing bonus in addition to $3 million in other incentives, totaling $4.25 million for the 2021 season.

According to data from Cointelegraph Markets Pro, Beckham’s total salary would be worth roughly 75.66 BTC given a price of $56,103 at the time of publication. Though the crypto asset reached an all-time high price near $69,000 on Nov. 10, it has since fallen under $60,000.

Beckham, who currently has a CryptoPunk-style image as his Twitter profile picture, currently plays with the Rams in Los Angeles. The city’s Staples Center — not the home of the Rams, but other sports teams including the Los Angeles Clippers — has recently been targeted by fans and social media personalities after the Crypto.com platform signed a $700 million deal to rename the arena.

Related: Pro sports leagues are no longer resisting NFTs: Dapper Labs

Beckham joins other professional sports players embracing crypto as the space seemingly becomes more mainstream. In October, Tampa Bay Buccaneers quarterback Tom Brady said he would be compensating the fan who held his 600th-career-touchdown football with 1 BTC along with some signed sports memorabilia. Green Bay Packers quarterback Aaron Rodgers — recently in the national spotlight after deceiving the public about his COVID-19 vaccine status — also said he would be receiving part of his $22 million salary in BTC.

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Bitcoin Black Friday: Bitpay Reveals List of Merchants Offering Discounts and Special Promotions

Bitcoin Black Friday: Bitpay Reveals List of Merchants Offering Discounts and Special PromotionsWhile cryptocurrencies have seen their values rise significantly during the last three months many digital asset holders will be spending their tokens for holiday gifts and Black Friday deals. Bitcoin Black Friday will be on November 26 this year and the crypto payments firm Bitpay has announced a slew of merchants that will offer deals […]

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Opposed to Bitcoin Payments, Bank of Russia Says State Should Not Stimulate Spread of Cryptocurrencies

Opposed to Bitcoin Payments, Bank of Russia Says State Should Not Stimulate Spread of CryptocurrenciesCryptocurrencies are anonymous and the government shouldn’t encourage their spread, the head of Bank of Russia has insisted. The regulator remains firmly opposed to the legalization of bitcoin and the like as a means of payment in the Russian Federation. Bank of Russia Reiterates Negative Stance on Cryptocurrencies, Legalization of Bitcoin A “responsible state” should […]

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