El Salvador Discusses ‘Bitcoin Embassy’ With Texas Officials
El Salvador, which has already lost tens of millions of taxpayer dollars on his authoritarian millenniumnew president besieged efforts to embrace cryptocurrencyncies, now says it plans to open a “bitcoin embassy” in Texas. The Central American country continued commitment to bitcoin comes despite last year’s crypto winter and surveys showing that the overwhelming majority of citizens have simply never used it.
Milena Mayorga, the country’s ambassador to the United States, she says discussed the embassy idea with Texas Deputy Secretary of State Joe Esparza. Although it is unclear what, if any, meaningful function a bitcoin embassy serves or what its physical presence will look likeMayorga believes the agreement could help “expansion of commercial and economic exchange projects.”
“The State of Texas, our new ally,” Mayorga wrote.
Indeed, this is not El Salvador’s first attempt at a bitcoin embassy. Late last year, the country signed one memorandum of understanding with the Swiss city of Lugano announced as aiming to support bitcoin adoption in both regions and strengthen cooperation in education and research. As part of that agreement, El Salvador plans to set up a “bitcoin office” where it will advocate for bitcoin in the city and Europe more generally. Lugano moved to create cryptocurrency Tether a “de facto” legal tender in March 2022, about a year after El Salvador became the first country in the world officially recognize bitcoin as legal currency.
While most others cities and local legislators boarding the crypto hype train cooled the tone after last year’s brutal crypto crash, El Salvador has doubled. Last summer, after months of falling cryptocurrency prices, President Nayib Bukele said El Salvador “bought the dip!” and invested 500 more coins at an average price of $30,744. Bukele repeated his commitment months later, proclaim the country would buy one new bitcoin every day for the foreseeable future. At the time of that announcement, the price of bitcoin was down 73% from the same time last year, and plummeting El Salvador’s inventory with that.
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All that investment has cost the country tens of thousands millions. In November, following a Bloomberg analysis, the country’s 2,381 total bitcoins were reportedly worth just $41.5 million, down 60% from the roughly $105 million they were worth when the government bought them in 2021. Bitcoin’s dismal performance may also have played a role in the credit bureau Fitch’s decision to downgrade El Salvador’s credit rating from CCC to CC. It is Fitch’s fourth-worst credit rating, seven ticks below the AAA gold standard.
El Salvador’s public embrace of the technology may succeed in drawing attention to it from external investors, but so far little has been done to actually boost the technology’s use in the country. One March 2022 examination conducted by the Chamber of Commerce and Industry of El Salvador found that an overwhelming 86% of businesses had never completed a transaction with bitcoin. World Bank data from 2020, meanwhile, found that only about half (55%) of Salvadorians even have access to the internet.
