In EI Salvador Called The Benefits Of The Legalization Of Bitcoin

The adoption of bitcoin as a legal tender has benefited El Salvador despite the fall in the price of the cryptocurrency. Finance Minister Alejandro Celaya announced this to Bloomberg.

According to him, the introduction of digital currency has expanded access to financial services to a largely unbanked population and attracted tourists and investments.

The minister admitted that the use of bitcoin as a medium of exchange in El Salvador is minimal. However, he continues to believe in the prospects of digital gold:

“For some, this is something new that they do not quite understand. But it is a phenomenon that exists, is gaining momentum and will be with us in the coming years.”

The El Salvadoran government began acquiring bitcoin shortly before its legalization in September 2021 with a $150 million specially created fund. The country has a balance sheet of 2,381 BTC (~$56 million). According to journalists, the cryptocurrency is worth about 50% less than the purchase price.

In March, the authorities announced the issuance of $1 billion bitcoin bonds but postponed the issue due to deteriorating market conditions. In June, Zelaya acknowledged that favorable conditions for the release had not yet arrived.

The IMF has criticized El Salvador’s decision to recognize bitcoin as a legal tender. In January, the institution recommended that the cryptocurrency be stripped of this status. According to the former head of the central bank, Carlos Acevedo, the adoption of digital gold “killed” the relationship with the fund.

Against this background, the country is negotiating with the IMF to provide it with a loan of $1.3 billion.

A survey by the American organization National Bureau of Economic Research showed that the majority of the population of El Salvador prefers to use fiat currency. About 60% of citizens who downloaded the state crypto wallet simply received a $30 bonus for registration and never returned to the application.

However, Zelaya is confident that digital tokens will play a significant role in the future.

“New technologies in previous years have shown how people were afraid of things like websites and digital business, but over time, reality imposed itself,” the minister said.

Zelaya added that the government had not abandoned plans to sell the announced bonds, is gradually promoting the Bitcoin City project, and will soon announce new cryptocurrency initiatives.