{"code":"25611","sect":"El Salvador","sect_slug":"el-salvador","hits":"7603","link":"https:\/\/elfaro.net\/en\/202107\/el_salvador\/25611","link_edit":"","name":"Bukele's Plan \u2014 Launching National Cryptocurrency by Year's End","slug":"bukeles-plan-mdash-launching-national-cryptocurrency-by-years-end","info":"","mtag":"Politics","noun":{"html":"\u003Cspan class='tint-text--dark' data_href='\/user\/profile\/sarauz'\u003E Sergio Arauz\u003C\/span\u003E, Nelson Rauda y \u003Cspan class='tint-text--dark' data_href='\/user\/profile\/rgressier'\u003E Roman Gressier\u003C\/span\u003E","data":{"sergio-arauz":{"sort":"sarauz","slug":"sergio-arauz","path":"sergio_arauz","name":"Sergio Arauz","edge":"0","init":"0"},"nelson-rauda":{"sort":"","slug":"nelson-rauda","path":"nelson_rauda","name":"Nelson Rauda","edge":"0","init":"1"},"roman-gressier":{"sort":"rgressier","slug":"roman-gressier","path":"roman_gressier","name":"Roman Gressier","edge":"1","init":"0"}}},"view":"7603","pict":{"cms-image-000036122-jpg":{"feat":"1","sort":"36122","name":"cms-image-000036122.jpg","link":"https:\/\/elfaro.net\/images\/cms-image-000036122.jpg","path":"https:\/\/elfaro.net\/images\/cms-image-000036122.jpg","back":"","slug":"cms-image-000036122-jpg","text":"<p>Yusef e Ibrajim Bukele (below, from left to right) in meetings with cryptocurrency businesspeople. Photo: El Faro.<\/p>","capt":"\u003Cp\u003EYusef e Ibrajim Bukele (below, from left to right) in meetings with cryptocurrency businesspeople. Photo: El Faro.\u003C\/p\u003E"}},"pict_main__sort":36122,"date":{"live":"2021\/07\/16"},"data_post_dateLive_YY":"2021","data_post_dateLive_MM":"07","data_post_dateLive_DD":"16","text":"\u003Cp id=\"docs-internal-guid-9c968b19-7fff-df33-5403-e5d44396b72f\" dir=\"ltr\"\u003E\u003Ca href=\"\/es\/202107\/el_salvador\/25609\/Bukele-y-sus-hermanos-planean-emitir-colones-digitales.htm\"\u003E\u003Cem\u003ELeer en espa\u00f1ol\u003C\/em\u003E\u003C\/a\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe Bukele administration has been planning to launch a national stablecoin cryptocurrency, which it preliminarily called \u201cCol\u00f3n-Dollar,\u201d by the end of this year. The move would restore a key element of monetary policy which the country lost when it adopted the U.S. Dollar in 2001: the ability to issue national currency. The government\u2019s plan also includes the use of blockchain technology to digitize a wide array of public and private documents, including personal ID cards and property deeds.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EEl Faro has over two hours of footage from virtual meetings, as well as documents registering Ibrajim and Yusef Bukele, the president\u2019s \u003Ca href=\"\/en\/202006\/el_salvador\/24542\/The-Bukele-Clan-that-Rules-with-Nayib.htm\"\u003Ebrothers and his closest advisors\u003C\/a\u003E, negotiating on behalf of the Salvadoran government, the rollout plan, and timeline, representing two years of work beginning in November of 2019. At least 50 people have participated in the negotiations, including senior officials from the Secretariat of Innovation from the President\u2019s Office, external advisors, and private contractors.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp\u003E\u003Ciframe src=\"https:\/\/www.youtube.com\/embed\/G4xtvacBR08\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"\"\u003E\u003C\/iframe\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp id=\"docs-internal-guid-330c69c3-7fff-e2fa-f990-e4a1c4f2795f\" dir=\"ltr\"\u003EAsked for a reaction via WhatsApp before publication, press secretary Ernesto Sanabria told El Faro that the government isn\u2019t considering any monetary changes beyond the Bitcoin Law approved on June 8. \u201cThe only public policy that [the government] has backed is that of Bitcoin alongside the dollar, with the dollar as the currency of reference. All the rest were discarded ideas or simply third-party proposals,\u201d he wrote.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EWhile the press secretary claims that the administration has discarded these conversations and plans, three fundamental steps discussed in the videos have already been taken: the approval of the Bitcoin Law, the creation of a government cryptocurrency wallet, and the announcement that the government will give each citizen $30 in bitcoin to incentivize use of the wallet.\u00a0A source familiar with the negotiations confirmed to El Faro that even after the Bitcoin law was passed, the plan remained intact to launch the national cryptocurrency.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe top government negotiators in this effort aren\u2019t formal government officials, but rather, the president\u2019s two brothers. In a series of meetings on May 27, June 4, and June 7, 2021 \u2014 from which El Faro had obtained footage \u2014 they present themselves as his advisors and indicate that Nayib Bukele has the final say.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EPress Secretary Sanabria also told El Faro that Ibrajim and Yusef Bukele do not hold formal posts in their brother\u2019s administration: \u201cThe president\u2019s brothers don\u2019t work for the government, but it\u2019s a secret to nobody that the president listens to them and frequently consults with them to make his decisions,\u201d he wrote via WhatsApp.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIn a June 4 meeting with blockchain companies WhizGrid and Cardano, Bukele\u2019s brother Ibrajim said, \u201cWhat we want to do first is build our government wallet and also stablecoin.\u201d Ibrajim then added the government\u2019s next move: \u201cdigitizing all of the government.\u201d At that point, the Salvadoran public knew nothing about the government\u2019s plans to adopt bitcoin as a national currency. The next day, President Bukele grabbed global headlines in Miami by announcing that bitcoin would become legal tender.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ETo oversee this emerging financial system in El Salvador, the administration is looking to create a superintendency called the El Salvador Blockchain Committee (ESBCC), according to slides presented during these meetings which El Faro reviewed. These documents on the ESBCC contain the institutional logos of the Secretariat of Innovation (an agency under the President\u2019s Office), the Central Reserve Bank, the Financial System Superintendency, and the National Registry of Persons.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EFor now there\u2019s no evidence that the government is planning to replace the U.S. dollar with the Col\u00f3n-Dollar, but it hopes to have the national cryptocurrency in circulation and changing hands \u2014 or phones \u2014 by New Year, according to the conversations.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cThis is just the beginning,\u201d Ibrajim said in a separate meeting with Massachusetts blockchain company Algorand on June 7, in reference to the Bitcoin Law that the legislature would approve in the span of five hours the next day. \u201cIn the future, we\u2019d like to make all cryptocurrencies legal tender, but for that to happen we need government infrastructure that is up to the task for what\u2019s ahead.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cstrong\u003E\u201cThe decision to make this is already done\u201d\u003C\/strong\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EOn May 27, eight days before the announcement that bitcoin would become legal tender, Yusef and Ibrajim Bukele met with Jack Mallers, founder of cryptocurrency wallet developer Strike and promoter of the bitcoin experiment in El Zonte, who says he lived in El Salvador for three months. Also in attendance was Strike\u2019s chief financial officer Bob Scully. Strike \u003Ca href=\"https:\/\/twitter.com\/ElFaroEnglish\/status\/1401354122662748161\"\u003Eannounced\u003C\/a\u003E on May 5 that it would create the Salvadoran government\u2019s wallet, called Chivo, a slang term that roughly translates to \u201ccool\u201d.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EPublic officials who attended the May 27 meeting include: Vladimir Handal and Fabrizio Mena, secretary and undersecretary of innovation, respectively; Andr\u00e9s Ortiz, a web developer also working for the President\u2019s Office; and Alejandro Muyshondt, national security advisor. Also in attendance were Carlos Alfaro, a private sector advisor; Guillermo Hasbun, a popular YouTuber known as GabeHash who is also president of CIFCO, the International Center for Fairs and Conventions; and Christopher Mel\u00e9ndez Bertrand, who wrote his University of El Salvador thesis on blockchain technology in New York State. El Faro could not identify the other three attendees.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp\u003E\u003Ciframe src=\"https:\/\/www.youtube.com\/embed\/e5FyJ6-viY4\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"\"\u003E\u003C\/iframe\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EStrike\u2019s CEO, Jack Mallers, claimed during the meeting that his company\u2019s cryptocurrency wallet platform has over 100,000 users. He noted one hurdle for increasing downloads: \u201cThe big roadblock that we run into is, at least on the merchant acceptance side, that they get a little nervous when we mention bitcoin because they don't know exactly how that's regulated or if they're going to do something kinda wrong.\u201d\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=1135&ImageId=36122\" class=\"pobj\" style=\"max-width: 100%\" rel=\"resizable\" alt=\"Yusef e Ibrajim Bukele (below, from left to right) in meetings with cryptocurrency businesspeople. Photo: El Faro.\" \/\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\"\u003EYusef e Ibrajim Bukele (below, from left to right) in meetings with cryptocurrency businesspeople. Photo: El Faro.\u003C\/div\u003E\u003C\/figcaption\u003E\u003C\/figure\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIbrajim responded that the government will create financial incentives for merchants and consumers to trade using cryptocurrency. \u201cOur plan for rapid adoption is to give out $50 to everyone who signs up. That way, everyone will sign up automatically to the payment app.\u201d In a \u003Ca href=\"https:\/\/www.facebook.com\/watch\/live\/?v=948684045983808&ref=watch_permalink\"\u003Enational broadcast on June 24\u003C\/a\u003E, President Bukele reduced the quantity to $30 and added that it would be issued in non-convertible bitcoin.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EAt the close of the meeting, Yusef announced that President Bukele, his brother, had already made up his mind to move forward with bitcoin and the wallet. \u201cThe decision to make this, that's already done. The decision of when to launch the first announcement and what announcement that would be, we\u2019ll have to do it in the next few days.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u003Cstrong\u003E\u201cWe Have to Kickstart This\u201d\u003C\/strong\u003E\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003ESimultaneous to the creation of the government crypto wallet, the government planned the development of a national stablecoin, which the administration tentatively called \u2018Col\u00f3n-Dollar\u2019 in reference to El Salvador\u2019s to the Col\u00f3n, which it adopted in 1892, and the U.S. Dollar, which it adopted in 2001.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EA stablecoin is a class of cryptocurrency whose trade value \u2014 unlike bitcoin \u2014 doesn\u2019t depend on sheer supply and demand for the coin, but rather matches the value of an influential fiat currency, like the U.S. Dollar or Euro, or a precious metal, like gold. This makes stablecoins attractive to traders who want the more stable price of the paper currency but want to keep their financial assets in cryptocurrency.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe Salvadoran government\u2019s stablecoin, the Col\u00f3n-Dollar, would be issued by the Central Reserve Bank, backed by a reserve of U.S. dollars, and integrated with the government wallet, Chivo. To incentivize its use, Ibrajim explained in his June 4 meeting with stablecoin experts that the government would start by creating a reserve of dollars to back the Col\u00f3n-Dollar.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cIf we can make this government wallet backed by, I don't know, 500 million U.S. dollars in the Central Bank to have this stablecoin teller where we can give out subsidies and loans to these people, that would help us a lot at the beginning,\u201d he said at the meeting, which had a dozen attendees, including government officials, external advisors, and members of private sector.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cThe only way for you to get some government coin is to buy it,\u201d Ibrajim continued. \u201cSo let's say we give out, I don't know, a five percent discount on every government service if you pay with our wallet. With our coin.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EOne of the attendees was Ramy Copty, the Cyprian cofounder of WhizGrid, a consulting firm based in Cyprus dedicated to developing cryptocurrency infrastructure. \u201cWe champion creative untried blockchain concepts and convert them into fully-formed, operational and innovative financial solutions,\u201d says their website.\u00a0\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EWhizGrid says its first contact with the Salvadoran government was in November of 2019 at a \u201cdigital technology event\u201d in San Salvador on \u201cthe benefits of blockchain technology for the government and citizens.\u201d That same month, the company says it met with Vladimir Handal and his advisors to \u201cdiscuss various possible blockchain solutions.\u201d Eighteen months later, in April, the company finished an extensive report to the Salvadoran government, proposing the name of the stablecoin, potential features and uses for the coin, and a project timeline.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EAfter the government wallet and stablecoin, the administration\u2019s next step, according to a preliminary written timeline reviewed by El Faro, is to gradually digitize all government records and processes, starting with identification, social security cards, and tax records, followed by property deeds, birth certificates, vaccination cards and other medical records, subsidy cards, professional and academic certificates, and criminal records. The digital forms of these documents would be stored on blockchain technology. According to the timeline, the government hoped to complete the digitization between March and November 2022.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIn early June, WhizGrid made a proposal to the Salvadoran government, alongside Swiss blockchain company Cardano, to provide consulting services for its stablecoin and other blockchain projects. They promised that, if selected, they would also enlist the help of the Austrian Blockchain Center to train a \u201clocal\u201d Salvadoran team and otherwise assist in the project rollouts. \u201cWe don't actually have a regional office for Central America or South America,\u201d said Copty. \u201cSo if we were to do a project of this scale, why shouldn't El Salvador be the Cardano main hub for the entire region? It makes perfect sense.\u201d\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EThe preliminary timeline shows that, by August, the Salvadoran government hopes to have a strategic and legal analysis on adjusting national laws to blockchain technology. By September 7, they hope to have developed the Col\u00f3n-Dollar, along with the digital wallet and point-of-sale infrastructure, compatible with Android and iOS. A week later, by September 14, they hope to have a macroeconomic analysis and legal strategy for digitizing public records and issuing subsidies. By the end of this year, they hope that the cryptocurrency would begin circulating.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003EIn his June 7 meeting with Algorand, two days after the bitcoin announcement and one day before the Bitcoin Law passed through the Legislative Assembly, Ibrajim Bukele told those in attendance that his brother, the president, was in a hurry.\u003C\/p\u003E\u003Cbr\/\u003E\u003Cbr\/\u003E\u003Cp dir=\"ltr\"\u003E\u201cI just got a message from the president, so we have to kickstart this. We have to rush it because there's too many people right now interested in it,\u201d said Ibrajim. \u201cSo, we're going to have a discussion today with the president about the next steps to do this. But we're really interested in bringing all the great minds of the world and really building a society for the future.\u201d\u003C\/p\u003E"}