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El Salvador’s government announced it would publish its first report on Bitcoin mining. The authorities announced the establishment of the first national Bitcoin office (ONBTC) to oversee all local projects related to digital assets. The announcement comes after El Salvador President Nayib Bukele noted that the country would buy a single Bitcoin daily. On November 25 2022, a social media post stated that the country’s government had doubled its crypto initiatives. According to El Salvador’s official Gazette, the new office is meant to focus on cryptocurrency projects, which was established in Decree No. 49, summarised in article two.
The office will manage and consult Bitcoin projects and also with other countries’ organisations in all matters related to digital currency. According to a published report by experts at Bitcode Method, the “ONBTC will design, diagnose, plan, program, coordinate, follow up, measure, analyse and evaluate plans, programs and projects related to Bitcoin.” Bitcoin’s advocate, Stacy Herbert, will be involved in setting up the office. Herbert wrote about how honoured she was to be involved in a social media post. El Salvador is working closely with different Ministries to formulate regulations in the local crypto sector and to introduce educational programs. According to the post, the Ministry of Foreign Affairs will collaborate in cases of internal cooperation. At the same time, the independent and municipalities may do so to the extent that their regulations allow.
The post also states that President Bukele will hire the agency’s director and appoint all necessary personnel. “All public institutions shall collaborate with ONBTC to fulfil its functions and objectives.” President Bukele is a well-known pro-cryptocurrency advocate and is not in charge of ONBTC appointments. The report also states that president Bukele will manage individuals who seek meetings regarding Bitcoin and blockchain subjects. The country started its Bitcoin experiment in September 2021 and planned to hold the land through debt and unfavourable market conditions. Bitcoin city will be built near Conchagua volcano in order for the city to leverage geothermal energy to power bitcoin mining. This plan will also assist companies in the area with significant tax relief.
The launch news comes after El Salvador’s Minister of the Economy, Maria Luisa Hayem Breve, submitted a Digital Assets Issuance Bill. The digital asset bill intends to bolster the planned issuance of Bitcoin bonds that has been blemished by controversy. The report also indicated that the bonds might be distributed by the state geothermal company La Geo. Last year El Salvador made history by becoming the first nation to embrace the digital coin as a legal tender within its borders. The country’s primary focus has been on Bitcoin and attaining profits from BTC purchases in order to improve infrastructure. Even though the entire crypto market has had a tumultuous year, El Salvador has remained pro-crypto. It continues to establish crypto plans, believing digital assets have the potential to be a proper investment tool.
Challenges surrounding Bitcoin
At the start of 2022, the crypto world could have looked better, but the implosion of Tera, which wiped out two top 10 cryptocurrencies due to macroeconomic events, did not help. This led to a domino effect that took down several industry participants. El Salvador had announced a potential $1 billion Bitcoin bond project which is now on hold. According to a report by the US National Bureau of Economic Research, out of 1800 households surveyed, only 20% continued to use the Chivo Wallet after spending a $30 bonus given by the government for downloading the wallet. Only 1,6% of remittances were sent to El Salvador with digital wallets, even though the main aim of making Bitcoin a legal tender was to ease remittances to the country. The souring of El Salvador’s relationship with the IMF did not make things better either. The situation went from bad to worse when FTX, a cryptocurrency exchange, imploded. The exchange filed for Chapter 11 bankruptcy, and the co-founder and CEO, Sam Bankman-Fried, resigned. All these challenges occurring in the winter season left investors questioning the state of cryptocurrency and if one should get involved in the crypto space if such events could cripple the entire industry.
However, those challenges may be why some investors remain optimistic about the crypto industry’s long-term future and believe 2023 should be better. The Fundstrat’s Head of Research, Tom Lee, believes that the events mentioned above are a cleansing moment for the industry. President Bukele continues to bet on the success of Bitcoin initiatives. Launching a National Bitcoin Office (ONBTC) signifies that El Salvador is dedicated to planning new projects and maintaining its place in the crypto space. As we salute El Salvador for establishing its spot and continuing with developments and regulations, we will keep you updated with any developments ONBTC.
Byline: Hannah Parker
