In summary
- VanEck considers El Salvador to be Latin America’s “ultimate comeback story” thanks to Bitcoin adoption and radical reforms.
- Bitcoin adoption has increased in El Salvador, with 8% of the population using the Cryptocurrency for payments, according to VanEck’s report.
- El Salvador has reduced violence and is now attracting technology investment, offering a “freedom visa” for cryptocurrency enthusiasts.
El Salvador has become Latin America’s success story, according to investment manager VanEck, thanks in large part to its Bitcoin-loving president.
A report from the New York firm said the country’s commitment to Bitcoin and radical reforms have made it “Latin America’s definitive comeback story.”
El Salvador was a little-known, crime-ridden country before its president, Nayib Bukele, became leader in 2019.
His maverick way of doing things, including making Bitcoin legal tender in the nation in 2021 and building a mega prison, led to criticism from various institutions, American politicians, and human rights groups.
But it’s working, according to VanEck.
“From tax reforms to Bitcoin adoption and energy innovation, the nation has defied global skepticism and achieved measurable success, whether through USD bond yields, GDP growth or Bitcoin valuation, boosting its reserves,” cites a report from the firm’s head of digital asset research, Matthew Sigel.
He added that the country has “defied global skepticism” by introducing Bitcoin to its citizens, and now 8% of Salvadorans have used the cryptocurrency to make payments.
Previous studies and even a Decrypt visit to the country have concluded that Bitcoin was not of much interest to Salvadorans. But that is changing, according to the report.
“The integration of Bitcoin into daily life is creating a foundation for broader acceptance and innovation in financial technology,” the report said. He added that a Trump administration in the US will also help.
“With Trump’s documented support for Bitcoin and his focus on reshoring and ‘supply chain friendliness,’ El Salvador could emerge as a strategic partner in US efforts to build regional alliances,” he said. President-elect Donald Trump ran a cryptocurrency-friendly campaign on his way to his surprise victory on November 5.
Sigel told Decrypt that other countries in the region are likely to follow suit, and that “the trend toward greater adoption of (Bitcoin) at the sovereign level appears to be well established.”
President Bukele has purchased Bitcoin using the country’s coffers, which has paid off as the price of the asset has increased significantly. He now owns more than 5,900 Bitcoins valued at $546.6 million, according to data from SpotOnChain. The country also mines cryptocurrency.
Bukele—whose social media personality is that of a cocky millennial who likes to insult the International Monetary Fund—has been praised by citizens for cleaning up crime in the country. But human rights groups such as Amnesty have criticized Salvadoran authorities for the alleged “systematic use of torture and other ill-treatment” of prisoners.
El Salvador, previously known as one of the most violent countries in the world, has changed dramatically due to President Bukele imprisoning 2% of the nation’s population, leading to a drop in the homicide rate.
The small country—popular with surfer backpackers—is now trying to attract tech investment and even offers a so-called “freedom visa” for cryptocurrency enthusiasts.
Edited by Stacy Elliott.
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