As a seasoned analyst with years of experience navigating global financial landscapes, I find El Salvador’s resilience and determination to embrace Bitcoin as legal tender truly remarkable. It is not often that we see a country so unwavering in its pursuit of technological innovation, especially when faced with the stern recommendations from established financial bodies like the IMF.
On Thursday, El Salvador declared plans to persist and possibly accelerate its Bitcoin purchasing approach, in stark contrast to the IMF’s suggestion to curb the nation’s involvement in cryptocurrencies. This announcement came a day after securing an agreement for financing with the International Monetary Fund (IMF).
Stacey Herbert, head of the Bitcoin Authority in El Salvador, announced on her social media platform that Bitcoin continues to be recognized as legal tender within the nation, and the administration intends to maintain a steady rate of purchasing this digital currency for its strategic reserves at a substantial speed.
šøš»EL SALVADOR SECURES $3.5 FUNDING DEAL
ā”ļøIn El Salvador, Bitcoin is still recognized as legal tender. This means they will likely keep purchasing bitcoin (potentially at an increased rate) for their Strategic Bitcoin Reserve. The construction of Bitcoin’s capital markets will carry on, with developments like the recent tokenized issuance serving as examples.
ā Stacy Herbert šøš»š (@stacyherbert) December 19, 2024
On Wednesday, El Salvador obtained a 1.4 billion dollar loan from the IMF. In return for this loan, President Nayib Bukele consented to make some modifications in the nation’s Bitcoin-related policies.
The International Monster Finance (IMF) hasn’t consistently endorsed El Salvador’s Bitcoin initiatives since President Nayib Bukele declared Bitcoin as legal tender in September 2021. In the year 2022, the IMF flagged concerns about using Bitcoin as legal money due to its volatile price fluctuations.
According to the IMF’s announcement, using Bitcoin by the private sector is optional, and payments of taxes will still be made in U.S. dollars. On the other hand, Bitcoin usage within the public sector will be limited. The government’s involvement in promoting Bitcoin adoption through the Chivo e-wallet is expected to decrease gradually over time.
As per the terms of the agreement, Bitcoin-related economic actions and Bitcoin transactions or acquisitions will be restricted within the public sector. Payment of taxes will continue to be made exclusively in U.S. dollars. Additionally, the government’s involvement with the crypto e-wallet (Chivo) will gradually decrease over time.
El Salvador Stands Firm Despite Restrictions
Nevertheless, even with the limitations set in the agreement, the nation remains resilient in its stance towards Bitcoin. Presently, it owns approximately 6,000 Bitcoins, equating to around $596 million. The head of El Salvador’s Bitcoin Office, Stacey Herbert, announced on her social media platform that Bitcoin continues to be recognized as legal tender and the country intends to keep acquiring the digital currency at a rapid pace for its strategic reserve.
Stacey added that the push towards expanding the Bitcoin financial sector continues, including projects such as the recent offering of tokenized U.S. Treasury bonds on Liquid via NexBridgeSV.
As an analyst, I’d like to emphasize that the construction of Bitcoin’s capital markets is progressing steadily. A recent example is the tokenized issuance of US Treasuries on the Liquid platform through NexBridgeSV. Further developments in this realm, particularly exciting announcements about Bitcoin-based capital markets, are imminent.
The head of trading and structured products for North America at Moneycorp, Eugene Epstein, commented on El Salvadorās announcement of buying more Bitcoin, suggesting it could be a response to negative reactions regarding the digital assetās decreasing importance in the country. Eugene added that, given the size and terms of the IMF deal, it made sense for President Bukele to take this step.
Stacey went on to explain in her post that her team is committed to progressing Bitcoin regulations, devising strategies, and enticing investors, all while constructing educational resources. One such resource is the “Little HODLer” Bitcoin and Finance Workbooks for students in grades 2 and 3, which are scheduled for release in January 2025. Furthermore, CUBO+ will carry on mentoring prominent Bitcoin and Lightning Network developers within the nation, with another cohort of approximately 20 students set to graduate by the end of January 2025.
Additionally, she noted that teaching Mi Primer Bitcoin and Node Nation will persist as part of the curriculum in high schools throughout El Salvador.
El Salvador is modifying its Bitcoin strategy to align with International Monetary Fund (IMF) requirements, such as reducing the government’s role in cryptocurrency services. The state-managed Chivo wallet may either be sold or discontinued, while personal Bitcoin wallets will continue functioning. Although facing IMF limitations, El Salvador remains dedicated to fostering Bitcoin financial markets and educational programs.
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2024-12-20 00:21