Bitcoin As Currency In El Salvador

Mike Leslie
March 22, 2024

President Bukele made headlines in September 2021 when he declared Bitcoin (BTC) a legal currency.

Inputs that matter: Bukele explains that El Salvador's vision is to become a wealthy nation through investments in digital currency.

  • The International Monetary Fund (IMF) has criticized the move due to the volatile nature of cryptocurrencies.
  • In March of 2024, the country purchased 5,000 BTC with a current value of around $400 million.
  • Stored offline in a government vault, the country is treating Bitcoin like gold.

The opportunity: FXStreet declares, "El Salvador has made a bold statement in the global investment landscape by eliminating income tax for international investments and money transfers."

  • In 2021, when EL Salavador made Bitcoin legal tender, the Bahamas opened its doors to crypto.
  • Ryan Austin, a technology teacher in the Bahamas during the FTX reign, explains, "Businesses got a boost from their existence here. Employees were paid well, and there was a lot of excitement around crypto, and then suddenly, everyone was trying to figure out what the hell happened."
  • The Daily Mail explains that in 2021, "FTX founder Sam Bankman-Fried met with the Bahamas prime minister to discuss paying off the country's entire $ 10 billion national debt."

Zoom in: Despite the move toward financial freedom, El Salvador ranks 115th out of 180 countries in the World Press Freedom Index.

  • "A democracy needs a free press, but to enjoy that membership you must do your duty as a reporter, report the facts and not be a puppet of those who finance them," Bukele said in his speech.
  • The Journalists Association of El Salvador (APES) reports incidents of journalists being threatened for reporting alleged government corruption.

Between the lines: Less than ten years ago, El Salvador was considered one of the most dangerous countries on the planet.

  • Today, it competes with Canada for the lowest homicide rate in the Western Hemisphere.
  • The reason for the change came about due to Bukele's crackdown on street gangs and criminal organizations, including MS-13 and Barrio 18.

Follow the money: El Salvador wants to attract wealthy foreign investors with low crime and crypto-friendly policies.

  • Bahamas Prime Minister Philip Davis KC explains "the lessons we learned from the FTX crypto exchange's collapse will enable The Bahamas to better strengthen its regulatory regime and emerge as a regional digital assets hub."
  • In 2023, the Bahamas strengthened its crypto stance with the Digital Assets and Registered Exchanges (DARE) Bill, with lessons learned from FTX.
  • Yale Insights reports, "Much of the publicly available information about the use of Bitcoin and Chivo Wallet in El Salvador has come in tweets by the country's president, Nayib Bukele."

Go deeper: Subscribe to the free newsletter to learn more.

Read More