Opposition to Nayib Bukele’s leadership in El Salvador, and particularly to his Bitcoin policies, has been rife amongst opposition parties and opposition media, and many are making claims that lack a basis in fact or miss critical context, particularly with regard to the new law on digital assets that was recently signed into effect.
The news that El Salvador’s Bitcoin bonds are going ahead have been welcomed by the market, as the announcement that the bond will be supported by DCG, Grayscale and Silvergate has played a significant role in the rallying of the Bitcoin price over the last week.
El Salvador has signed a new digital assets law into effect
On the 11th January, El Salvador signed a new digital assets law into effect that puts the country ahead of the rest of the world once more, and provides real clarity to investors and entrepreneurs.
The law reinstates that Bitcoin is to be treated as legal tender within the country, and draws a distinction between Bitcoin and the rest of the cryptocurrency space, with the overwhelming majority of other assets now being treated as securities thanks to their inherent centralisation and lack of censorship-resistance.
El Salvador is #Bitcoin country.
Bitcoin is money.
Everything else is a security. pic.twitter.com/jXJUpvWz5r
— The Bitcoin Office (@bitcoinofficesv) January 11, 2023
The clarity that El Salvador has given to the markets is expected to usher in a wave of new investment, as they have reached regulatory clarity far faster than most other jurisdictions around the world.
Critics lament several aspects of the digital asset law
One of the main claims that critics are making against the new digital assets law is that it permits the government to take out a lot of debt without due process and due scrutiny, which is not true.
They also contend that it could create an overly-speculative environment with a lot of volatility (something that El Salvador has a lot of experience with, and isn’t a major long-term concern for the average El Salvadoran), opens the door for money laundering (which belies a lack of understanding over Bitcoin’s transparency), and “creates entities with public funds”, which choose how to allocate the country’s Bitcoin holdings.
There are some reasonable concerns over this law, but the government of El Salvador and the Bitcoin community is well-equipped to deal with them, and the law is by and large a net positive for the country.
Nayib Bukele remains the most popular leader in the world
With approval ratings oscillating between 80 and 90%, Nayib Bukele remains the most popular democratically-elected leader in the world thanks to his tenure in the presidency thus far.
Only a few years ago, El Salvador was widely-recognised as one of the most dangerous countries in Central America, with MS13 regularly killing civilians and being actively permitted to do so by corrupt government officials.
Now, El Salvador is one of the safest countries in Central America and regularly celebrates days without homicides. Their GDP is amongst the fastest-growing in the world and the tourism industry is exploding.
El Salvador is paying off all of its debt
In stark contrast to some of the claims that the El Salvadoran government will use the new law to take on heavy amounts of debt in a duplicitous manner, the El Salvadoran government is set to become one of the few countries in the world to completely pay off its national debt.
This is thanks to the huge boost in tourism and entrepreneurial activity that the country has seen since signing Bitcoin into law, the rising socioeconomic stability thanks to the successful war that against the pandilleros, and their volcano bonds, from which they are expected to be able to successfully raise billions, thus replacing any of the predatory debt that they would have incurred via the IMF.
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