Approval of 52 reforms for El Salvador to be a bitcoin hub will be in phases, says deputy

Approval of the 52 legal reforms in El Salvador that complement El Salvador’s transformation into a bitcoin hub should be in stages rather than in a package. This is what Member of Parliament Dania González told Blocknews, who as president of the House Financial Commission, played a key role in the processing of the law that approved cryptocurrency as the country’s legal tender along with the dollar, a year ago. The reforms include things like volcano-powered bitcoin mining, tax breaks for anyone settling in the Bitcoin City that President Nayib Bukele promises to build, immediate citizenship for foreign investors, and new rules for financial assets.

The deputy said that with the drop in bitcoin it is not a problem for the country’s public accounts and that the government is buying the cryptocurrency. And she justified it by saying that the government decided to keep the state’s accounting in dollars, a much more stable currency than BTC. However, the government makes payments in bitcoin. According to her Twitter posts, Bukele claimed that she purchased 2,301 bitcoins as of mid-May.

However, Bukele is not accountable for purchases, spending on bitcoin, or anything he does crypto-related, like other projects he says he creates for or with digital currency, such as an animal hospital and schools. The International Monetary Fund (IMF), which is against bitcoin as legal tender, reported two weeks ago that it is trying to create statistics on bitcoin usage with the government of El Salvador.

Asked if it is not a risk for El Salvador to have two legal currencies that are not the country’s – dollar and bitcoin –, that is, whose control is in the hands of third parties, Dania said that the benefits are greater than having its own currency. And she cited as an example the incentives for projects like Bitcoin City and Surf City. The fact is that the country has not had its own currency for two decades, since it adopted the dollar in 2000.

On a visit to São Paulo, where she stayed for four days and participated in Bitconf 2022 between the 20th and 22nd of May, Dania met with entrepreneurs from the crypto-asset ecosystem, such as Rocelo Lopes, CEO of SmartPay, and Daniele Abdo Philippi, of Dape Capital, Ana Élle, CEO of Agency ROE. In addition, he met with deputies such as Áureo Ribeiro (Solidariedade) and Vinicius Poit (Novo), who follow the bill to regulate cryptocurrency exchanges. Who invited the deputy was Rodrix Digital, an expert at Dash and who has digital channels about crypto.

When El Salvador established bitcoin as the country’s legal tender along with the dollar last year, much was said about the ease of passing the law on behalf of the majority that President Bukele has among the 84 deputies of Congress. But Dania believes another factor helped with the approval: the average age of the Legislative Assembly, with very young legislators and virtually none over the age of 50. She herself is one of the youngest members of the House in all of history and told Blocknews that she has been buying cryptocurrencies “for many years”.

Dania has been in public life for a few years and is from the same right-wing party as the president, Nuevas Ideias. Bukele created the party when he was expelled from the FMLN, a left-wing party, for reasons such as creating internal divisions and disrespect for women – he mistreated a mayor. At the time he was mayor of San Salvador and looked good for president. Thus, in 2018, the party emerged, which is at the other end of the political spectrum and whose president is his cousin.

The deputy stated that the available data show that 70% of the population was excluded from the financial system. The population is 7 million in the country, but there are another 3 million abroad, most of them in the United States (USA). Thus, the use of bitcoin is helping people abroad to pay less fees to transfer funds to family members. The estimate she usually gives is that a single company specializing in transfers would have failed to earn $400 million in commissions in the last quarter of 2021. Therefore, after the law went into effect, in September.

According to the deputy, about 3 million people, that is, almost half of the population living in El Salvador, downloaded the Chivo digital wallet that the government created for using bitcoin, in the first month. To promote the wallet, Bukele gave a credit of $30 convertible into bitcoin to anyone who downloaded the app. Now, says Dania, there are promotions for those who buy certain products with bitcoin. Asked if the country can adopt other cryptocurrencies as legal tender, the deputy said that for now there is nothing about it on the horizon.

On educating Salvadorans about bitcoin and its use, Dania said that Bukele is using media outlets such as newspapers, TV and radio networks, as well as social media. The actions involved institutions such as the Ministry of Education, the Central Bank and consumer protection agencies. Exchange Paxful has also invested in Casa do Bitcoin, a crypto education hub. And the national commission for micro and small enterprises is teaching traders how to deal with novelty. And, she says, there are initiatives focused on women.

El Salvador’s GDP grew by 10.3% in 2021, returning to pre-Covid-19 pandemic levels. The reasons included, for example, raising the minimum wage, financing small and medium-sized companies, supporting the agricultural sector and infrastructure works, according to the country’s Central Bank. The institution does not cite the adoption of bitcoin as something that impacted the economy and 2021. Also in 2021, private investment grew and reached a record 18% of GDP. Foreign direct investment also increased, but remained at 1.1% of GDP.