El Salvador

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President Nayib Bukele’s Bitcoin gambit is becoming onerous for El Salvador, but that isn’t stopping him from adding to his stockpile, Bloomberg News reported. The impoverished Central American country has bought 2,301 Bitcoins since making it legal tender in September, based on Bukele’s announcements on Twitter, including yesterday’s 500-coin purchase as the price fell below $31,000. The tokens are worth $74 million now, well below the $103 million Bukele paid for them, according to calculations by Bloomberg.
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Salvadoran bond spreads to U.S. Treasuries spiked on Monday by the most in nearly seven weeks a day after Congress approved a monthlong extension of emergency measures President Nayib Bukele has said are necessary after a surge of gang killings, Reuters reported. Human rights groups say the measures infringe civil liberties and Bukele's critics say his control over Congress and the Courts has brought a backsliding on democracy. Bond prices have been on a downward swing for most of the past year, since Bukele's first overt moves to oust critics.
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El Salvador is seeking support from cryptocurrency exchange Binance for its implementation of bitcoin as legal tender and the issuance of bitcoin bonds, the Central American country's ambassador to the United States said on Wednesday, Reuters reported. Binance Chief Executive Officer Changpeng Zhao is visiting El Salvador and plans to meet President Nayib Bukele on Thursday, ambassador Milena Mayorga told reporters. Mayorga said Zhao's visit was a vote of confidence in Bukele's decision to adopt bitcoin as legal tender last September, as well as its plan to issue bitcoin-backed bonds.
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President Nayib Bukele’s unorthodox policies -- from ousting top court judges to trading Bitcoin on his phone with public money -- have heightened the nation’s perceived riskiness for investors and ratings agencies, Bloomberg News reported. “The weakening of institutions and concentration of power in the presidency have increased policy unpredictability, and the adoption of Bitcoin as legal tender has added uncertainty about the potential for an IMF program that would unlock financing for 2022-2023,” Fitch said in its statement.
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The International Monetary Fund's (IMF) board on Friday said it continued to have strong engagement with El Salvador and that no determination had been made on whether it could lend to the country which has made the cryptocurrency bitcoin legal tender, Reuters reported. El Salvador became in September the first country to make bitcoin a legal tender, alongside the U.S. dollar. The IMF has pressed El Salvador to backtrack on the bitcoin move, citing financial, economic and legal concerns.
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The bonds backed in bitcoin (BTC) that the Government of El Salvador will launch will be available in February and March 2022. This was confirmed on January 4, by the Minister of Finance, Alejandro Zelaya, CVBJ.biz reported. The Salvadoran official hopes that the strategy will be successful. Recall that, as reported by CriptoNoticias in November, the Central American country seeks to raise USD $1 billion through these bonds. The money will be used both to build the Bitcoin City and to acquire more BTC (to date, the nation has 1,391 bitcoins according to publicly available information).
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El Salvador intends to issue the world’s first sovereign Bitcoin bonds and build Bitcoin City, which will be free of income, property and capital gains taxes, President Nayib Bukele announced in the beach town of Mizata to a crowd of cheering Bitcoin enthusiasts, Bloomberg News reported. El Salvador plans to issue $1 billion in tokenized U.S.-dollar denominated 10-year bonds to pay 6.5% via the Liquid Network, according to Samson Mow, chief strategy officer of Blockstream.
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El Salvador last week became the first country in the world to adopt bitcoin as legal tender, with the aim of reducing costs in sending remittances, attracting foreign investment and boosting domestic consumption, Market Research Telecast reported. It does so after its parliament approved the cryptocurrency legalization, a law that has not been well received by international organizations and agencies.

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El Salvador's adoption of bitcoin as legal tender has immediate negative implications for it credit rating S&P Global said on Thursday, Reuters reported. S&P said the main risks were that it could threaten its hopes of securing a support programme with the International Monetary Fund, increase fiscal vulnerabilities and hurt banks by creating currency mismatches when they dish out loans. "The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits," S&P said. "There are immediate negative implications for (the) credit".
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Bitcoin plunged as much as 17% to its lowest level in a month as El Salvador’s crypto rollout got off to a rocky start, Bloomberg News reported. The largest cryptocurrency fell as low as $43,050 in New York on Tuesday, tumbling more than 10% in the course of an hour, before recouping about half the losses. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital tokens, lost as much as 19% at one point.
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