El Salvador Opens a ‘Bitcoin Embassy’ in Texas

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(Kitco News) – El Salvador continues to be an innovative force in the crypto world as the first country to adopt Bitcoin as legal tender has now established a relationship with the government of Texas and plans to open a Bitcoin embassy in the United States.

The announcement of this new intergovernmental cooperation was made via Twitter by Milena Mayorga, Salvadoran ambassador to the United States, as Tuesday posted a message discussing the results of a meeting she had with Texas officials.

“In my meeting with the Assistant Secretary of the Government of Texas, Joe Esparza, we discussed the opening of the second Bitcoin Embassy and the expansion of commercial and financial exchange projects,” Mayorga said.

Texas and El Salvador already share extensive business ties, with the two parties seeing a commercial exchange of $1,244,636,983 in value in 2022, according to Mayorga.

This new partnership wants to set up a Bitcoin embassy – which will also serve as El Salvador’s representative office – in Texas to work on new joint projects promoting Bitcoin adoption. It follows the establishment of the first Bitcoin embassy in Lugano, a city in the south of Switzerland, which took place in October.

Texas lawmakers are some of the most active in the United States in developing regulations and establishing partnerships in blockchain technology. Currently, there is a bill pending in the state legislature that calls for the creation of “a master plan for the expansion of the blockchain industry,” according to Forbes. The goal of the initiative is to make Texas the nation’s crypto capital by “introducing tax-free shopping with bitcoin, among other proposals.”

While this latest development has been met with excitement by the crypto community, not everyone is happy with El Salvador’s continued push to promote Bitcoin, including the International Monetary Fund (IMF), which on Monday recommended that the country reconsider its plans to increase its exposure to Bitcoin.

The IMF made the recommendation after a visit to the country, highlighting the risks associated with the government’s exposure to the cryptocurrency and urging El Salvador to address a number of concerns.

“While risks have not materialized due to the limited Bitcoin use so far – as suggested by survey and money transfer data – use could grow given legal tender status and new legislative reforms to encourage the use of crypto-assets, including tokenized bonds ( Digital Assets Law),” the IMF said on Friday.

The IMF also called for greater transparency from El Salvador due to a high level of uncertainty and advised the country to refrain from financing Bitcoin purchases through the issuance of tokenized securities due to the financial risk involved.

“Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, governments should reconsider their plans to expand government exposure to Bitcoin, including by issuing tokenized bonds. The use of the proceeds of the new Bitcoin Fund Management should follow regular expenditure controls and good governance practices,” says the IMF’s statement.

Last month, El Salvador passed a law to regulate the issuance of other digital assets. El Salvador’s Congress voted on the Digital Assets Issuance bill, which allows the country to issue the first round of “volcano bonds” to pay off foreign debt and build up the investment haven “Bitcoin City.”