{"code":"25541","sect":"El Salvador","sect_slug":"el-salvador","hits":"2650","link":"https:\/\/elfaro.net\/en\/202106\/el_salvador\/25541","link_edit":"","name":"How El Salvador Adopted Bitcoin in Five Hours","slug":"how-el-salvador-adopted-bitcoin-in-five-hours","info":"El Salvador adopted the dollar in November of 2000, just eight days from the time of announcement. 'Bitcoinization,' meanwhile, took two and a half days, and just five hours from the time the bill reached the legislature. The most in-depth explanations of the two-page law weren\u2019t given to the legislative committee in charge of analyzing it, nor to the Assembly itself. Rather, Bukele and two of his brothers fielded questions on the bill in a Twitter livestream, in English, with foreign investors. Leer en espa\u00f1ol","mtag":"Transparency","noun":{"html":"Nelson Rauda y \u003Cspan class='tint-text--dark' data_href='\/user\/profile\/rgressier'\u003E Roman Gressier\u003C\/span\u003E","data":{"nelson-rauda":{"sort":"","slug":"nelson-rauda","path":"nelson_rauda","name":"Nelson Rauda","edge":"0","init":"0"},"roman-gressier":{"sort":"rgressier","slug":"roman-gressier","path":"roman_gressier","name":"Roman Gressier","edge":"1","init":"0"}}},"view":"2650","pict":{"cms-image-000035967-jpg":{"feat":"1","sort":"35967","name":"cms-image-000035967.jpg","link":"https:\/\/elfaro.net\/images\/cms-image-000035967.jpg","path":"https:\/\/elfaro.net\/images\/cms-image-000035967.jpg","back":"","slug":"cms-image-000035967-jpg","text":"<p>On June 8, 2021, 62 of 84 deputies in the Nuevas Ideas-controlled Legislative Assembly voted to make the cryptocurrency bitcoin legal tender in El Salvador. The bill, sponsored by President Bukele and allegedly written with the help of U.S. bitcoin entrepreneur Jack Mallers, was presented to the legislature just five hours before becoming law. It will take effect 90 days from passage.<\/p>","capt":"\u003Cp\u003EOn June 8, 2021, 62 of 84 deputies in the Nuevas Ideas-controlled Legislative Assembly voted to make the cryptocurrency bitcoin legal tender in El Salvador. The bill, sponsored by President Bukele and allegedly written with the help of U.S. bitcoin entrepreneur Jack Mallers, was presented to the legislature just five hours before becoming law. It will take effect 90 days from passage.\u003C\/p\u003E"}},"pict_main__sort":35967,"date":{"live":"2021\/06\/10"},"data_post_dateLive_YY":"2021","data_post_dateLive_MM":"06","data_post_dateLive_DD":"10","text":"\u003Cp id=\"docs-internal-guid-544859bc-7fff-e8e1-3e69-8d1cb1286ca1\" dir=\"ltr\"\u003EAt 7 p.m. on Tuesday, June 8, two events competed for Salvadorans\u2019 attention: on the one hand, kickoff for the men\u2019s national soccer team; on the other, the economy minister\u2019s presentation of a bill to convert bitcoin into legal tender in the country. By 8:45, Salvadoran forward Walmer Mart\u00ednez had yet to consummate a three-nil victory over Antigua and Barbuda, but the Legislative Assembly\u2019s Finance Committee had already sent the bill, mandating that Salvadorans accept the digital currency in exchange for goods and services, to the Assembly floor for a final vote.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EEl Salvador is the first country in the world to make bitcoin legal tender, effective in September. By any account, the Bukele administration rushed the bitcoin law through the legislature. From its initial presentation to its passage with 62 of 84 votes, the bill spent five hours in the Assembly, ending just after midnight on June 9.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe law requires \u201cevery economic actor to accept bitcoin as a form of payment\u201d and allows for the payment of taxes as well as debts acquired before the bill\u2019s passage to be paid in the cryptocurrency. Excluded from these obligations are \u201cthose who evidently and by established fact cannot access the technologies to carry out bitcoin transactions.\u201d The bill doesn\u2019t specify the criteria for determining who gets the exemption. Rather than studying how the bill fit into existing legislation, the deputies simply decreed that \u201cany provision contradicting it is hereby repealed.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\t\t\u003Cfigure class=\"pict pict_land pict_move_posc 0 cs_img cs_img--curr rule--ss_c\" data-shot=\"pict\" data-hint=\"pict\"\u003E\u003Cdiv class=\"pict__pobj text-overflow\"\u003E\u003Cimg src=\"https:\/\/elfaro.net\/get_img?ImageWidth=2000&ImageHeight=1333&ImageId=35967\" class=\"pobj\" style=\"max-width: 100%\" rel=\"resizable\" alt=\"On June 8, 2021, 62 of 84 deputies in the Nuevas Ideas-controlled Legislative Assembly voted to make the cryptocurrency bitcoin legal tender in El Salvador. The bill, sponsored by President Bukele and allegedly written with the help of U.S. bitcoin entrepreneur Jack Mallers, was presented to the legislature just five hours before becoming law. It will take effect 90 days from passage.\" \/\u003E\u003C\/div\u003E\u003Cdiv class=\"pict__line block edge--ss_lax edge--ss_rax padd--ss_l0x padd--ss_r0x line--ss_s0b lineh rule--ss_c\"\u003E\u003Cspan class=\"block-inline full-width align-middle lineh__rect tint-back--nake\"\u003E\u003Cspan\u003E\u00a0\u003C\/span\u003E\u003C\/span\u003E\u003C\/div\u003E\u003Cfigcaption class=\"pict__text cs_img_caption folk_content typo_buttons line--ss_s0c line--ss_s0c--auto block full-width text-overflow rule--ss_l relative\"\u003E\u003Cdiv class=\"__content block-inline full-width align-top tint-text--idle relative\"\u003EOn June 8, 2021, 62 of 84 deputies in the Nuevas Ideas-controlled Legislative Assembly voted to make the cryptocurrency bitcoin legal tender in El Salvador. The bill, sponsored by President Bukele and allegedly written with the help of U.S. bitcoin entrepreneur Jack Mallers, was presented to the legislature just five hours before becoming law. It will take effect 90 days from passage.\u003Cdiv class=\"photographer text_italic rule--ss_l tint-text--idle\"\u003E\u003C\/div\u003E\u003C\/div\u003E\u003C\/figcaption\u003E\u003C\/figure\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe decision to dollarize El Salvador\u2019s economy in 2001 was also hasty and lacking rigorous analysis and proper debate, \u003Ca href=\"\/es\/201203\/opinion\/7830\/Dolarizados-por-la-ideolog%C3%ADa-y-un-diputado-ebrio.htm\"\u003Eeconomists say\u003C\/a\u003E. President Francisco Flores announced the decision on November 22, 2000 and sent the bill to the Assembly the next day. It passed into law on November 30. A month later, dollars began circulating, but the permanent rise in foreign investment that Flores promised never followed. By the time the Bitcoin Law was passed, just two and a half days had gone by since Bukele made a surprise virtual appearance at the Bitcoin 2021 conference in Miami to announce that El Salvador would convert bitcoin into legal tender.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EOn stage during the announcement, and apparently holding back tears of joy, was U.S. cryptocurrency executive Jack Mallers, 27, dressed in a ballcap and hoodie. He revealed that Yusef Bukele, \u003Ca href=\"\/en\/202006\/el_salvador\/24542\/The-Bukele-Clan-that-Rules-with-Nayib.htm\"\u003Eone of the president\u2019s three brothers and closest advisors\u003C\/a\u003E, had reached out to him. \u201cI kind of pissed my pants,\u201d \u003Ca href=\"https:\/\/twitter.com\/ElFaroEnglish\/status\/1401354122662748161\"\u003Ehe recounted\u003C\/a\u003E.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EYusef explained to him that 70 percent of the population has no bank account, and that he had been working with the government to develop a platform in increase financial inclusion by allowing users to send free remittances, \u201cso that when you send money home they\u2019re not going to take fucking half of it.\u201d The government also \u201casked me to help write a bill,\u201d he elaborated, to convert bitcoin into legal tender.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EA 2016 poll conducted by El Salvador\u2019s Central Reserve Bank revealed that 77 percent of Salvadorans lack a savings account, and that two in five have none of the following: a savings account, credit card, insurance, or pension. Western Union, a middle man for remittances, says it charges 6 percent per transfer, though Bukele told bitcoin entrepreneurs on Twitter the day that the bill passed that the rate reached 30 percent.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe Bukele administration contracted Jack Mallers\u2019s company, Strike, to create a digital bitcoin wallet, an application similar to those of private banks in which clients can make transfers, consult their account balance, and access other services. The difference, given that bitcoin is totally digital, is that there are no ATMs or cash withdrawals. Salvadorans will be able to use other wallets according to availability, but will have the government wallet as a fall-back.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe bitcoin announcement happened on Saturday, June 5. By the following Tuesday, the Bitcoin Law, which Mallers allegedly helped to write, passed through the Assembly at breakneck pace. Between the announcement and the bill\u2019s passage, those who most received Bukele\u2019s public and personal courtship to promote his project \u003Ca href=\"https:\/\/twitter.com\/ElFaroEnglish\/status\/1402684960209653761\"\u003Ewere foreign investors\u003C\/a\u003E. \u201cBitcoin has a market cap of $680 million,\u201d \u003Ca href=\"https:\/\/twitter.com\/nayibbukele\/status\/1401335885497524226\"\u003Ehe wrote on Twitter\u003C\/a\u003E on Saturday following the announcement. \u201cIf 1% of it is invested in El Salvador, that would increase our GDP by 25%.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ESince the video of Bukele and Mallers went viral on June 5, the Bukele administration has leveraged state-run media coverage and social media marketing to keep bitcoin on the national agenda. The president tweeted in English about the cryptocurrency dozens of times, and changed his social media profile picture to one where he has red eyes shooting laser beams \u2014 a nod to the international cryptocurrency community. Dozens of public officials, including his former private secretary now serving as president of the Assembly, copied the move.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EAs El Salvador grabbed headlines around the world, Bukele wrested control of the media narrative from his administration\u2019s \u003Ca href=\"https:\/\/mailchi.mp\/elfaro.net\/el-faro-english-bukele-talk-bitcoin-060721\"\u003EJune 4 announcement to end cooperation\u003C\/a\u003E with the International Commission against Impunity in El Salvador (CICIES), an anti-corruption monitoring and advisory commission formed in a 2019 agreement with the Organization of American States. The CICIES had been investigating evidence of corruption in his administration.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EWhile the bill worked through the Assembly on Tuesday, and without having given a press conference or public speech on the topic, Bukele and his brothers Karim and Yusef appeared in an English-language livestream on Twitter Spaces to sell their plan to cryptocurrency entrepreneurs, most of whom spoke with accents from the United States.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe questions and answers in the Twitter Space, hosted by U.S. venture capitalist Nic Carter, were far longer and more substantive than the commission tasked with evaluating the Bitcoin Law. \"We're designing this new law that gives permanent residence to anybody that invests three bitcoins inEl Salvador,\" Bukele told the audience, which at one point amassed 20,000 viewers. The new bitcoin law mentions no immigration reforms. At the time, bitcoin was trading at $33,000. \"Innovators, investors, entrepreneurs, bitcoiners that want to buy a vacation house or live by the beach,\" he added.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe Nuevas Ideas legislative bloc has also weighed in online. \u201cFinancial inclusion and freedom. Deflationary counterweight. Ease of transactions (i.e., remittances). Long-term investment with exponential growth,\u201d tweeted Nuevas Ideas deputy Rodrigo Ayala, an economist. \u201cBitcoin is also ecology, humanity, respect. It\u2019s progress, the future. It\u2019s moving forward, and it\u2019s democracy,\u201d intoned Nuevas Ideas deputy Carlos Bruch.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe speeches on the Assembly floor, just like the language of the law, offered no public explanations of bitcoin, what will be the difference in transaction fees between current intermediaries and those handling cryptocurrency, and how the monetary change will be applied and implemented. The Bukele brothers did, though, offer more insights in the June 8 Twitter Space \u2014 some of which clashed with messaging on the Assembly floor.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cNobody will be forced here. Those who do want it will use it,\u201d said GANA Deputy Guillermo Gallegos, a staunch legislative ally of Nuevas Ideas who sits on the executive board of the 2021 legislature, on June 8, of accepting transactions in bitcoin. Bukele, meanwhile, said the opposite in the Twitter Space: \u201cIf you go to McDonald\u2019s, they can\u2019t say \u2018we don\u2019t accept bitcoin.\u2019 They have to accept it by law. Bitcoin won\u2019t apply to accounting but you can pay your taxes in bitcoin.\u201d\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EAccording to Bukele so far, consumers won\u2019t be forced to make payments or convert their savings into bitcoin, but merchants will be forced to accept it as payment, whether they are a banker or an ice cream vendor.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe ice cream vendor will then have the option to convert the bitcoin they receive as payment into dollars before transferring earnings to their bank account \u2014 assuming they have one \u2014 through a government exchange, Bukele elaborated in the Twitter Space. \u201cThey have to take the bitcoin, but not the risk. So they will translate that risk to the government,\u201d he said. If the value of a transaction in bitcoin, which regularly shifts by 10 percent in a given day, changes between the sale of a stick of ice cream and the time to transfer the money to the bank, Bukele says the government will convert the bitcoin to dollars at the value of bitcoin when the ice cream was sold, assuming any gain or loss.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ETo bankroll these fluctuations, the new law creates a trust fund through the public Development Bank of El Salvador. \u201cThe purpose of the trust fund is not to make money, but to support this decision of having bitcoin as legal tender and that it runs for years and years with no problems,\u201d explained Bukele. \u201cIt doesn't involve the Federal Reserve or even our central bank. It\u2019s just a trust fund in our development bank.\u201d He added that merchants can also trade their bitcoins for dollars on private cryptocurrency exchanges.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ENone of these explanations made it to the Assembly floor, into state-run media broadcasts, or even into the Spanish language.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cstrong\u003E\u201cEvery Day Will Be a New Idea\u201d\u003C\/strong\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EAt one point a participant in the Twitter Space asked Bukele whether his administration had considered creating bitcoin mining facilities in El Salvador. \u201cNever thought of it, but every day is going to be a new idea. So we're not thinking of mining, but we can do something to promote mining,\u201d he responded. \u201cHere there\u2019s energy that you get from volcanoes...it's also 100 percent clean because the energy of the volcanoes turns the water into vapor and that makes energy.\u201d\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe next day, June 9, Bukele \u003Ca href=\"https:\/\/twitter.com\/nayibbukele\/status\/1402714926800674827\"\u003Eunveiled a new project, in English, on Twitter\u003C\/a\u003E. \u201cI\u2019ve just instructed the president of La Geo, our state-owned geothermal electric company, to put up a plan to offer facilities for bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanoes. This is going to evolve fast!\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EBukele dropped more news in the June 8 Twitter Space: the International Monetary Fund (IMF), with which the administration is negotiating a $1 billion loan to refinance its debt, reached out to schedule a meeting for Thursday, June 10, and expressed trepidations about the bitcoin project. In May, government debt \u003Ca href=\"\/es\/202105\/el_salvador\/25473\/Arena-se-suma-a-Nuevas-Ideas-y-aprueba-730-millones-en-deuda.htm\"\u003Eexceeded 90 percent of the value of the country\u2019s gross domestic product\u003C\/a\u003E. \u201cI tried to explain to them that this is a huge opportunity for the country and a big message for the world, but it's not going to change our macroeconomics,\u201d he said of his talks with the Fund.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe Bitcoin Law, 16 articles long, fits on two pages. In sending it along to the Assembly floor for a final vote, the Finance Committee left no time to hear from the implementing agencies, banks, economists, or anyone else. Arena Deputy Rodrigo \u00c1vila said his party wasn\u2019t opposed to the discussion of the bill, but asked to hear expert opinions and for a slower process. Nuevas Ideas flatly said no. \u201cI took the time to sift through the list of \u2018experts\u2019 that they\u2019ve invited to give their opinion, and they\u2019ve always been the same. So, why would we call them here if they know nothing about this topic?\u201d said deputy William Soriano, 29.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cWhat they want to approve in the Assembly about bitcoin has implications too severe for the whole population to approve without debate and a serious technical analysis,\u201d said Ricardo Castaneda, economist with the Central American Institute for Fiscal Studies (ICEFI), \u003Ca href=\"https:\/\/twitter.com\/Recasta\/status\/1402454783974424583\"\u003Eon Twitter\u003C\/a\u003E. Renata \u00c1vila, a Guatemalan attorney and Stanford University researcher specializing in technology, wrote: \u201cInstead of a visionary, experimental approach to test alternatives (starting with small pilots, independent risk assessments, etc), the\u003Ca href=\"https:\/\/twitter.com\/hashtag\/ElSalvador?src=hashtag_click\"\u003E #ElSalvador\u003C\/a\u003E\u003Ca href=\"https:\/\/twitter.com\/hashtag\/Bitcoin?src=hashtag_click\"\u003E #Bitcoin\u003C\/a\u003E Law is an imposition, reckless and rushed. Disconnected from the country's social and economic context.\u201d She then \u003Ca href=\"https:\/\/twitter.com\/avilarenata\/status\/1402699030661115911\"\u003Eadded\u003C\/a\u003E: \u201cI\u2019ve never seen so much ideological, juridical, mathematical, and economic-monetary incongruence converge, in three pages.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EA group of ten Salvadoran economists \u003Ca href=\"https:\/\/twitter.com\/lusovargas\/status\/1402466598217302016\/photo\/1.\"\u003Esigned a letter\u003C\/a\u003E questioning the promise that the cost of sending remittances will decline. \u201cThere\u2019s no government action behind the price of bitcoin to guarantee the value of this pseudo-currency and...people would receive remittances that can lose value from one moment to another.\u201d They also lamented that \u201csuch a transcendental decision was taken so lightly, behind the public\u2019s back, without open, pluralistic discussion and sufficient rigorous analysis.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E*English version by Roman Gressier\u003C\/p\u003E"}