El Salvador became the first country in the world to adopt Bitcoin as a legal tender. Fast forward to this year, the crisis worsened in the already battered crypto industry. But President Nayib Bukele plans on doubling down further.
After pledging that the government would purchase one Bitcoin every day going forward, despite the meltdown, the Bukele administration sent a bill to El Salvador’s Congress to enable it to sell $1 billion in “volcano bonds” – government debt, denominated in USD and pay out 6.5% interest a year to bondholders – to purchase more of the crypto-asset and build the hyped “Bitcoin City.”
The dramatic collapse of FTX, a once-prominent crypto exchange founded by Sam Bankman-Fried, has provided endless fodder for the press and long-standing crypto critics alike. And while the negativity continues to dominate coverage of Bitcoin in the Central American country, the national cash crunch appears to be worrying.
Bukele Reacts to Critics
The latest reports suggest that the country is on the edge of a debt crisis. With Bitcoin dropping over 70% since September 2021, El Salvador’s $300 million “Bitcoin ‘Revolution” could be in danger. However, Bukele lashed out at mainstream media over double standards and went on to tweet,
“This article is full of lies, which is standard for Bloomberg… But what is most surprising is how the mainstream media suddenly cares so much about El Salvador. Corrupt politicians plundered 37 billion dollars from our state coffers and they never wrote one single article.”
Bukele has faced severe backlash from the International Monetary Fund (IMF). On the other hand, rating agency Moody’s showed that El Salvador’s Bitcoin trades raised its risk profile. Overall, the country’s Bitcoin program experienced several logistical and technical glitches, especially with its Chivo wallet
Furthermore, there were widespread reports of identity theft after the release of the digital wallet. Many Salvadorans claimed that their $30 signup bonus had been drained before they could access the system.
Advancing Bitcoin Strategy
The latest comments come days after El Salvador’s government announced a new crypto initiative called – National Bitcoin Office (ONBTC) – to oversee all local projects related to the asset. The ONBTC is expected to function as a “specialized administrative unit, with functional and technical autonomy within the Presidency of the Republic.”
The government also presented a bill last month that aimed to set up regulations on the domestic crypto industry by establishing a designated commission.