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On the six-month anniversary of El Salvador’s adoption of bitcoin (BTC) as legal tender, President Nayib Bukele stated that he will unveil 10 new BTC-specific legal reforms next week – with over 40 more to come.
The reforms are likely to center on ways the state can issue bitcoin bonds – which Bukele and his government said they hope will fund the construction of the Bitcoin City project. The new city will be a tax-free haven for international bitcoiners.
Bitcoin was adopted as legal tender in an act that passed on September 7 last year.
On Twitter, Bukele spoke in response to a post from the crypto advocate and social media influencer Adel de Meyer, who tagged the Salvadoran leader, writing:
“How far are you with those reforms in El Salvador? I really want to take my bitcoin and brains out of these rich west countries for a while, maybe forever.”
Bukele has attracted many critics in the crypto community, but the President appears to have caught the eye of a number of figures with promises of coming “volcano bonds,” so named because the city will be built at the foot of a volcano producing geothermal power for bitcoin miners.
As previously reported, Samson Mow, former chief strategy officer of Blockstream and a recent ally of Bukele’s adoption plans, explained last year that the bond offering would be partly “converted to bitcoin,” with 50% of the bond fee to be “used for infrastructure and bitcoin mining powered by geothermal energy.”
Mow has subsequently explained that Bukele was planning to follow up with legislation that would allow the state to issue the bonds. El Salvador is looking to raise USD 500m with the bond issuance, but has no legal infrastructure in place to make a bond issuance in anything other than fiat.
However, the mainstream media remains hostile to Bukele and bitcoin. El Diario de Hoy reported that “six months since BTC” adoption, “zero benefits” have befallen the Salvadoran public. Indeed, the newspaper remarked that Bukele and his government had actually “lost over USD 16m” worth of public funds on BTC buys, pointing to falling crypto prices in the time following all of the government’s purchases.
The media outlet and other critics have hit out at Bukele for his lack of transparency in making the purchases, news of which has been circulated almost exclusively on social media.
Critics say that the government has not revealed whether it is making purchases using crypto exchanges, and how much it is paying in fees.
Bukele and his ruling party have hit back by stating that they were not casually “buying coins on [their] smartphones,” and that correct protocol was being observed.
The media outlet explained that Bukele has amassed some BTC 1,801 (USD 75.5m), but had spent almost USD 90m on the coins, per its calculations of BTC prices at the time of (announced) purchase.
In addition, the government has also spent hundreds of millions of USD on adoption measures, the newspaper reported, including the following:
- USD 150m on a central bank reserve of USD to support the use of bitcoin;
- USD 120m in “golden hello” benefits for registering with the state-run Chivo Wallet app;
- undisclosed payments to Chivo-related contractors and support staff, as well as Chivo employees.