El Salvador passes landmark crypto bill, paving way for Bitcoin-backed bonds

January 12, 2023 Coin Telegraph

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The “Digital Asset Issuance” legislation will also create a regulatory body and establish a legal framework for all digital assets.

El Salvador has passed landmark legislation providing the legal framework for a Bitcoin-backed bond — known as the “Volcano Bond” — that will be used to pay down sovereign debt and fund the construction of its proposed “Bitcoin City”.

The bill passed on Jan. 11 with 62 votes for and 16 against, and is set to become law after it is ratified by President Bukele.

#Plenaria90✍ Con 62 votos a favor, creamos la Ley de Emisión de Activos Digitales. pic.twitter.com/g1poXwLoH3
— Asamblea Legislativa (@AsambleaSV) January 11, 2023

The National Bitcoin Office of El Salvador announced the passage of the bill in a Jan. 11 Twitter thread, noting that it would begin issuing the bonds soon.

3/ El Salvador is the epicenter of Bitcoin adoption, and thus, economic freedom, financial sovereignty, censorship resistance & unconfiscatable wealth.

When we issue the first of the volcano bonds, we will once again be blazing the path forward for this new monetary revolution.
— The Bitcoin Office (@bitcoinofficesv) January 11, 2023

According to crypto exchange Bitfinex, which is the technology provider for the bonds, the Volcano Bond — or Volcano Tokens — would allow El Salvador to raise capital to pay down its sovereign debt, fund construction of the Bitcoin City and create Bitcoin mining infrastructure.

The volcano descriptor for the bonds is derived from the location of the country’s Bitcoin City, which is set to become a renewable crypto-minin hub powered by hydrothermal energy from the nearby Conchagua volcano.

Bitfinex notes that the city would be a special economic zone similar to those seen in China, which would offer tax advantages, crypto-friendly regulations and otherwise incentivize Bitcoin businesses for its residents.

The bonds have been targeted to raise $1 billion for the country, with half of it going into building the special economic zone.

According to the initial proposal, the tokenized bonds would be denominated in U.S. dollars, have a ten-year maturity date and carry an annual interest rate of 6.5%.

Samson Mow, a Bitcoin proponent who has been involved in the development of the Volcano Token, told Cointelegraph that the bill’s passage could help turn the country into a “major” financial hub.

“The move to pass the new Digital Securities Law, and enable new instruments like the Bitcoin Bonds, will help El Salvador to pay off their existing debts and will be critical to transforming the country into a major financial center of the world.”

The bill also includes a legal framework for all digital assets that are not Bitcoin, in addition to those issued on Bitcoin, and creates a new regulatory agency that will be in charge of applying the securities law and providing protection from bad actors.

5/ The new legislation also creates the National Digital Assets Commission, the regulating agency in charge of applying the securities law and protecting the rights of digital asset purchasers as well as issuers in El Salvador, and of deterring fraudsters from operating here.
— The Bitcoin Office (@bitcoinofficesv) January 11, 2023

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Turkish and Salvadoran presidents meet, Bitcoiners left disappointed

January 21, 2022 Coin Telegraph

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The Turkish President welcomed Nayib Bukele to Ankara for an official state visit. Anyone expecting a Bitcoin talk left disappointed.

Bitcoin (BTC) took more than just a beating in the markets. The orange coin got the cold shoulder as Turkish President Recep Tayyip Erdoğan welcomed his Salvadoran peer Nayib Bukele in the capital of Turkey to talk about a number of topics. While Bitcoin failed to be a talking point, it did not stop the Twitter rumor mill from going into overdrive.

As part of the state visit, Bukele and Erdoğan kicked off with an official ceremony. Shortly afterward, they inaugurated the new Salvadoran embassy before agreeing on six deals covering the economy, trade, defense, diplomacy and education.

The trade deals seek to increase trade volume between the two countries Turkey to $500 million in 5 years. Trade volumes for 2020 and 2021 were $27 million and almost $50 million respectively.

Mainstream media outlets watched closely to see if Bukele would attempt to orange-pill Erdoğan. However, there was no mention of Bitcoin or cryptocurrency during Thursday proceedings.

That did not stop Twitter from speculating and deceiving audiences about the nature of the encounter. A coordinated news burst made by fake Twitter accounts imitating popular accounts @Deltaone, @Zerohedge, and a Bukele parody account @LaDictatore simultaneously announced that Turkey would announce Bitcoin as legal tender by February 2022.

The announcement was false. LaDictatore’s account has since been suspended but the screenshot of their announcement lives on:

In the hours following the fake news, the Bitcoin bulls regrouped to pump the price to within touching distance of $43,000 before falling off a cliff to $38,000 this morning.

As the Turkish Lira continues to struggle, analysts expected Bukele to make the case for Bitcoin. Given that the Turkish ruling party recently held a meeting in the metaverse, the tide may be turning. And if any discussion did happen Thursday, it happened behind closed doors.

President Bukele fires back at critics on ‘Bitcoin experiment’

December 24, 2021 Coin Telegraph

Adoption

The adoption of Bitcoin is changing El Salvador’s economic landscape, according to the Salvadoran president.

On Thursday, Salvadoran President Nayib Bukele reaffirmed his belief for Bitcoin (BTC) supremacy on Twitter once again, this time stating that after widespread adoption occurs, “it’s game over for fiat.”

The Salvadoran president has been a mainstay in news headlines due to his government’s regular BTC purchases and absolute pro-Bitcoin stance. He has made frequent statements and comments to support the original cryptocurrency while refusing to budge in the face of criticism that Bitcoin is a bad idea for the nation.

President Bukele’s recent tweet comes as the international community launches a barrage against El Salvador for its “Bitcoin experiment.”

The International Monetary Fund criticized El Salvador’s move to adopt Bitcoin as legal tender in June, but the country nevertheless passed it and began accepting BTC as legal money in September. Andrew Bailey, governor of the Bank of England, is a known critic of Bitcoin. More recently, while speaking at the University of Cambridge Students’ Union, Bailey expressed his concerns over El Salvador’s decision to use Bitcoin as a currency due to its extreme volatility.

What has been called by international organizations as “The #Bitcoin Experiment”, is nothing more than the world watching how mass adoption changes a country’s economy.

If it’s for the good, it’s game over for FIAT.

El Salvador is the spark that ignites the real revolution.
— Nayib Bukele (@nayibbukele) December 23, 2021

However, Bukele fired back at his critics, pointing out that while the rest of the world regarded El Salvador as a “Bitcoin experiment,” it was transforming its economy with Bitcoin mass adoption. Bukele also claimed that when fiat is no longer a factor compared to BTC’s dominance, El Salvador will be regarded as the spark that starts the real revolution.

Since adopting Bitcoin as legal currency, El Salvador has used Bitcoin profits or the “surplus” from its Bitcoin Trust account to finance the construction of 20 schools. In mid-October, Bukele announced that the government would spend $4 million from the Bitcoin Trust to build a new veterinary hospital in San Salvador.

Bukele’s latest riff comes as El Salvador recently bought 21 BTC on Tuesday to celebrate the “last 21st day of the year 21 of the 21st century” and commemorate the scarcity of Bitcoin as its supply is limited to 21 million BTC.

El Salvador introduces fuel subsidy of $0.20 per gallon to locals who pay in BTC

October 4, 2021 Coin Telegraph

El Salvador introduces fuel subsidy of alt=

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El Salvador is looking to bolster adoption of its government-issued Chivo Bitcoin wallet by offering discounts on petrol purchases of $0.20 per gallon to consumers who pay using BTC.

Salvadoran president Nayib Bukele has announced that local consumers can enjoy a $0.20 per gallon reduction in petrol prices when paying using the government-backed Bitcoin wallet, Chivo.

Describing the news as “positive news for the pockets of Salvadorans,” the president announced the subsidy via Twitter on Sept. 30. According to a rough translation, Bukele stated:

"The state company Chivo negotiated with the largest gas station companies in our country, so that starting tomorrow, their stations will sell each gallon of fuel $ 0.20 cheaper, with Chivo wallet."

Bukele emphasized that there is no limit to the discount and that any local person or company can access the rebate. He added that the discount will erase “several increases in the international price of fuels” and “reduce transportation costs in supply chains.”

However, some Salvadorans appear unconvinced that the subsidy ultimately benefits the public, with Twitter user Adan_3840 responding:

“Those 20 cents will come from all of us, right? The gas station does not lose, there goes the refund after paid with the taxes of even those who walk on foot.”

Others were cynical of the government’s decision to offer the discount to only those who pay using Chivo, with another Twitter account questioning why the administration did not move to offer relief on fuel prices at an earlier date.

Alongside the news, Bukele also revealed that he has authorized a fund intended to “stabilize” the domestic price of liquified gas. The president asserted that while the international market had planned a $1.17 rise in the price of 25-pound cylinders of liquified gas, Salvadoran locals will experience “a slight reduction” in cost.

He added that the government will absorb the increase for one year only, noting any reductions in global gas prices will also be passed on to consumers during the period.

El Salvador became the first country to legally recognize Bitcoin as legal tender on Sept. 7. Later that month, Bukele claimed that one-third of Salvadorans were already using Chivo less than three weeks after its launch.

However, onlookers have expressed skepticism regarding Bukele’s reports of surging crypto adoption, with outspoken crypto critic and author David Gerard asserting that Salvadoran officials are “feeding Bukele numbers that please him” that “fall apart under the slightest examination.”

In his Attack of the 50 Foot Blockchain newsletter, Gerard analyzed Chivo usage metrics reported by Bukele to conclude that the government-backed wallet “would be doing more transactions a day than Visa does worldwide” if the President’s data were accurate.

A Rocky Start for Bukele’s Bitcoin Law — El Salvador After Adoption

September 25, 2021 Bitcoin.com

El Salvador acts on Bitcoin price dip and buys 150 BTC

September 20, 2021 Coin Telegraph

Adoption

El Salvador didn’t miss the chance to buy the dip as the Bitcoin price fell back to $45,000 after a bullish week.

Despite warnings from global agencies regarding its adoption of Bitcoin (BTC), El Salvador's government continues to seize market opportunities.

As the Bitcoin price fell below $46,000 on Monday morning, Salvadoran President Nayib Bukele announced on Twitter that the country has “bought the dip.” With 150 new coins, the Central American government now holds 700 BTC, worth close to $32 million at the time of writing.

In an obvious nod to the “not financial advice” disclaimers shown around the crypto ecosystem, Bukele shared his “presidential advice” by reminding that “They can never beat you if you buy the dips.”

Presidential advice
— Nayib Bukele (@nayibbukele) September 20, 2021

As reported by Cointelegraph, El Salvador bought another dip on the day BTC became legal tender in the country, when Bitcoin experienced a flash crash to below $43,000.

El Salvador’s move toward adoption got the crypto universe excited, especially with the possible tax exemption for Bitcoin investors. However, the government’s decision to adopt Bitcoin as legal tender is not totally free of problems.

Aside from protests and marches against the government’s Bitcoin move, credit rating agency Standard and Poor's Global said that the adoption “has immediate negative implications” for the country’s credit rating. S&P also claimed the move would hurt El Salvador’s chances of securing a $1 billion loan agreement from the International Monetary Fund.

El Salvador made history by becoming the first country to recognize Bitcoin as legal tender on Sept. 7. The government held 400 BTC then. By taking advantage of two price dips in two weeks, purchasing 150 coins each time, El Salvador raised its Bitcoin holdings to 700 BTC.

70% of Salvadorans opposed to Bitcoin Law as Sep. 7 implementation draws near

September 3, 2021 Coin Telegraph

Bitcoin Law

The majority of El Salvadorans are skeptical of the country’s impending Bitcoin Law, with 90% of locals describing their understanding of crypto as poor or non-existent.

With less than a week to go before El Salvador's Bitcoin Law takes effect on Sept. 7, a majority of citizens surveyed are opposed to government-mandated cryptocurrency adoption.

A survey conducted by the local Central American University’s (UCA) Institute of Public Opinion has found that 70% of Salvadorans believe President Nayib Bukele’s Bitcoin Law, recognizing the cryptocurrency as legal tender, should be repealed.

However more than 90% of those surveyed also admitted they have a poor understanding of cryptocurrency.

The institute recorded a dire public approval rating of just 7.64% for the president — the lowest registered during Bukele’s term so far.

El Salvador’s struggling economy

Attitudes to the Bitcoin Law appear intertwined with worries over the country’s poor economic performance.

The poll found that 45% of Salvadoran citizens believe that poverty and unemployment are the two most urgent problems facing the nation, and 43% believe that the nation’s economy will worsen with the passing of the Bitcoin Law.

According to The World Bank, 22.8% of El Salvador’s population are currently living below the poverty line, while the average annual income in the country is just $3,800. More than two-thirds of Salvadorans do not believe the local economy will improve even with an increase to the minimum wage.

The poll also found that 20% of Salvadorans “openly state that they do not know what a Bitcoin is,” while a further 70% confess to having a poor understanding of cryptocurrency. According to a rough translation, the researchers conducting the survey concluded:

“In other words, nine out of 10 Salvadorans have no clear knowledge of what this financial asset is.”

The findings echo a similar poll taken in July, which found that only 20% of locals approved Bukele’s forthcoming Bitcoin Law.

Bukele govt sprukes BTC

If there’s a sliver of optimism to be taken from the poll, it’s that the latest figures suggest the number of citizens with “no understanding” of Bitcoin has more than halved from July’s figure of 46% — suggesting efforts from the government to increase awareness have had some slight effect.

On August 30, Bukele shared the country’s first state-backed Bitcoin TV advertisement to Twitter, featuring animated tutorials on how the government’s “Chivo” digital wallet can be used to purchase goods and transfer value.

The following day, Bukele tweeted out images of Bitcoin ATMs that are slated for rollout across the country, with the President claiming that 50 physical terminals will be operational on Sept. 7. The President also estimated that the pivot to embrace crypto will save the country $400 million each year in remittance fees.

Los puntos Chivo ayudarán a que la población pueda utilizar @chivowallet.

Esto les dará libertad y seguridad financiera, aparte de recibir beneficios, entre ellos el ahorro de 400 millones de dólares al año en comisiones para enviar y recibir remesas.#Bitcoin #PuntosChivo pic.twitter.com/BtVrKiK5eZ
— Nayib Bukele (@nayibbukele) August 31, 2021

To help drum up support for Bitcoin, the government also launched a charitable campaign collecting BTC donations to fund dental treatments for impoverished Salvadorans. The “Bitcoin Smiles” campaign raised 1.02 BTC (roughly $50,000) in total from 797 individual contributions.

Despite the government’s best efforts, concerns clearly remain. Hundreds of local citizens turned out to protest the law in solidarity with unions and social organizations on Sept. 2.

Sindicatos y organizaciones sociales se pronuncian en contra del Bitcóin, en las afueras del Centro Cultural Cívico Legislativo. pic.twitter.com/C9ftS6OfCD
— LPGPolitica (@LPGPolitica) September 1, 2021

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El Salvador’s struggling economy

Bukele govt sprukes BTC

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