Nayib Bukele is the 43rd president of El Salvador. While seen as a controversial president to the world, Bukele’s official approval rating within the country is high. Under Bukele, El Salvador became the first country to declare Bitcoin as legal tender. The president is now planning a tax-free “Bitcoin City,” the construction of which is set to begin this year.
In June, Bukele revealed a bill naming Bitcoin as legal tender in El Salvador and requiring all businesses to accept it. The bill saw approval just days later, which some believe is due to Bukele’s aggressive restructuring of the Salvadoran government. The bill officially came into effect on Sept. 7, 2021, making El Salvador the first country to name Bitcoin legal tender. That same day, many crypto enthusiasts invested $30 in Bitcoin to show solidarity.
Bukele requested assistance implementing Bitcoin from the World Bank, but the entity declined due to Bitcoin’s environmental and regulatory concerns. That said, Athena Bitcoin, a Bitcoin ATM company, announced it would establish 1,500 Bitcoin ATMs in the country come September.
In August, El Salvador revealed a $150 million trust to help facilitate transactions between Bitcoin and the U.S. dollar within the country. This trust would ensure merchants can immediately convert their Bitcoin to cash to circumvent its volatility.
Later that month, Bukele noted that businesses would no longer be legally required to accept Bitcoin, though he implied companies refusing it would suffer, tweeting: “If someone wants to continue carrying cash, not receive a sign-up bonus, not gain customers who have Bitcoin, not grow their business and pay commission fees on remittances, they can continue to do so.”
On Sept. 6, the day before Bitcoin officially became legal tender, Bukele and his government purchased 400 BTC, causing the price to rise before crashing hard. On Sept. 7, Bukele tweeted about purchasing another 150 BTC and credited the “discount.” In December, Bukele revealed his government held 1,141 BTC.
The nationally-based wallet, Chivo, was used to launch El Salvador’s BTC implementation. Citizens who downloaded and registered an account within the app were given $30 in Bitcoin via the trust. However, many citizens simply cashed out the Bitcoin due to various issues on launch day. For one, Chivo’s listing on App Store and Google Play was sporadic, leaving many eager citizens unable to find it. Others had phones that were too old to run the app, and then there were those experiencing downtime and other issues. Some were able to use Chivo just fine, but they appeared to be in the minority. Allegedly, citizens are still having problems with Chivo to this day.
In November, Bukele revealed plans for “Bitcoin City,” a tax-free, volcano-powered city. Instead of paying traditional taxes like property and income tax, the city would generate income through value-added taxes. Bukele then announced that a $1 billion “Bitcoin bond” issued by Blockstream would fund the city’s development.
Bukele claimed that the construction of his Bitcoin City will begin in 2022. The president stated that he wants to attract outside investment to help build the “tax-free” city and will likely spend time seeking out these investors over the next year.
Bukele hopes that half of the raised funds will pay back the $1 billion bond, while the other half will go toward developing the city’s additional infrastructure. The president has faced criticism regarding Bitcoin City, but he has no intentions of stopping its construction.
Law & Politics
