El Salvador is Lovely This Time of Year
Bitcoin es moneda de curso legal en el país centroamericano (Bitcoin is legal tender in the Central American country)
Bitcoin es moneda de curso legal en el país centroamericano
How’s your Spanish? Shoot, how is your friggin’ geography?
Those questions suddenly became relevant this week as a dapper Latin gentleman wearing a continuity sash spoke to us, telling us the words we’d been dying to hear:
We’re no longer a sidechick. We’re to be right there with his country’s main squeeze, the US dollar, El Salvador’s adopted currency since 2001.
The gentleman was Nayib Bukele, El Salvador’s president, and his announcement was that Bitcoin was to become legal tender in El Salvador.
This gave the world’s most popular cryptocurrency news buzz like it hadn’t experienced in years. Full text of the legal tender law was later shared on Twitter by Bukele, and was followed by announcements about using El Salvador’s volcanos to power Bitcoin mining.
We interviewed Cato’s George Selgin to get his always-sober take. His TL/DR: it’s a great law, except for articles 7 and 13, which “undermine free choice in currency instead of promoting it.” The devil is in the details.
Article 13 provides that ’All obligations in money expressed in USD, existing before the effective date of this law, may be paid in bitcoin.’ Selgin notes that this goes against freedom of private contract.
He then says: “Article 7 is even worse. Far worse in fact. It provides ‘that every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.’”
Legal tender typically applies to outstanding debts, not to spot payments. In most countries merchants and other sellers are NOT REQUIRED to accept "legal tender" in ordinary payments (for example they can put up “cash only” or “card only” signs), but in this El Salvador law everyone will be required to accept BTC. It’s this coercion that freedom advocates and economists like Selgin are pushing back against. Selgin adds: “We find many celebrating a law that actually deprives a nation of that choice, only because it happens to do so by compelling people to accept their own preferred currency!”
During a Twitter Spaces hangout, Bukele pushed back on the idea that there was any coercion, because the BTC could be automatically converted to USDT at the point of transaction. The President of the Financial Committee of El Salvador's Congress, Dania González, also clarified Bitcoin’s usage would not be coercive but instead a legal option. Selgin offers the question:
“I am a Salvadoran merchant. I have internet and a smart phone. I post a USD price. I want to be paid USD, strike or no strike. In fact I prefer cash. May I insist on it under the new law? Yes or no?”
The answer is no.
So if the intention of the law is to have no coercion, then the actual wording of the law needs to be changed, and articles 7 and 13 repealed. Let’s hold the champagne until then.
Right on cue, the International Monetary Fund (IMF) issued a less-than enthusiastic statement on the whole affair:
“Adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis. … We are following developments closely, and we’ll continue our consultations with the authorities.”
Many of us are still hopeful, holding out he might be the right one.
El Salvador is lovely this time of year.
Operation Trojan Shield Had Boozy Beginnings
Hatched by international law enforcement during a couple of beers, the scheme nabbed 800 people over dozens of countries around the world (along with mounds of crypto). Dubbed Operation Trojan Shield, cops covertly commissioned AN0M, a private encrypted messaging app. AN0M played on the need for extreme privacy among folks running afoul of certain laws, using a method as old as time: trust. AN0M was invitation-only, and spread quickly throughout organized crime … each user unsuspectingly putting police in their pockets. Vice’s treatment of the saga is well-worth reading, but especially if you’re under the delusion there is such a thing as communication privacy in the digital age.
Popular Philippines Digital Wallet GCash Considers Crypto Trading
GCash, a major digital wallet in the Philippines used for daily payments, is reportedly considering introducing crypto trading services. Apparently, the company is looking to be the region’s Venmo, PayPal, Square, etc. in this regard. “There is massive Bitcoin and overall crypto adoption happening in Southeast Asia,” journalist Joseph Young gushed over GCash’s prospects. “Particularly, the Philippines, Thailand, and Vietnam are showing a rapid increase in user activity. Price talk aside, this fundamental growth is very inspiring and optimistic.”
Crypto Key Opinion Leaders’ Accounts Blocked by Weibo
China’s Twitter equivalent Weibo apparently blocked “a large number of” crypto influencers. “This is the harshest suspension of crypto in history, and it may be a response to Beijing's crackdown policy,” reliable watchdog Wu Blockchain documented. The purge “includes China's most famous DeFi leaders” and “many famous traders.” Winston Ma told Reuters, “The government makes it clear that no Chinese version of Elon Musk can exist in the Chinese crypto market.”
Elizabeth Warren Cannot Help Herself, nor can Trump
US Senator Elizabeth Warren is one of the latest political figures to latch onto a passionate hatred for Bitcoin. Her takeaway? Mining energy consumption and its adverse affect on climate change. We’re sure her hatred has nothing to do with the potential of bitcoin to threaten the U.S. dollar’s dominance over the global financial system — Brad Sherman once cited this as a reason to ban Bitcoin many years ago. He accidentally said the silent part loud that Bitcoin would “interfere with the US dollar being virtually the sole reserve currency in the world”. Trump also criticized bitcoin, once again, this week, and at least gave what seems to be a more honest answer more along Sherman’s lines: “Seems like another currency competing against the dollar.”
They don’t like competition, do they.
By C. Edward Kelso, NBTV Head Writer, and Naomi Brockwell.
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