On Thursday, the government of El Salvador, alongside the stablecoin company Tether, announced a joint initiative called “AdoptingElSalvadorFreedom” that allows foreigners to obtain a Salvadoran passport in exchange for paying $1 million in Bitcoin.
In 2021, El Salvador became the first country to adopt Bitcoin as legal tender, mandating that businesses accept the leading cryptocurrency as a form of payment and rolling out a digital wallet called “Chivo,” incentivizing citizens to partake with a $30 sign-up bonus in Bitcoin.
The venture proved controversial, with Salvadorans protesting the move—alongside President Nayib Bukele’s concerning autocratic shift—and adoption was slow, with the vast majority of citizens sticking with cash. Meanwhile, Bukele’s spending tens of millions in federal funds on Bitcoin proved disastrous, with its price plummeting from an all-time high of around $69,000 in November 2021—when Bukele announced the development of a “Bitcoin City”—to under $17,000 at the beginning of 2023.
Still, El Salvador has proved popular with Bitcoin acolytes from around the world, with the country’s tourism minister announcing in May that travelers were flocking to the country in historic numbers, driven by its commitment to crypto. That included many of the international community’s most prominent “Bitcoin maxis,” such as the influential company Swan Bitcoin, which opened a house in El Zonte, a surf town largely credited for starting the country’s Bitcoin experiment.
A steep decrease in the nation’s crime—spurred by Bukele’s contentious policy of locking up thousands of the country’s alleged gang members—has further incentivized Bitcoin supporters to flock to the country.
‘Visionary individuals’
Thursday’s announcement represents a new phase for El Salvador’s commitment to Bitcoin, buoyed by Bukele’s unverified pronouncement that his investment in Bitcoin has turned profitable, thanks to a recent price rally.
The Bukele administration has long partnered with Bitfinex, an affiliated company of Tether—the world’s leading stablecoin, or a crypto asset pegged, in this case, to the U.S. dollar—that has faced scrutiny over its lack of transparency and offshore jurisdiction. In April, Bitfinex became the first company to receive a license in El Salvador’s new crypto regulatory regime, and the government tapped the firm to help launch a long-delayed Bitcoin-backed bond.
According to a statement from Tether shared with Fortune, the new visa program enables participants to obtain a Salvadoran passport through a one-time payment of $1 million in Bitcoin, which the company is describing as an “investment,” although it is unclear where the funding will be directed. The program is seeking “visionary individuals,” including “high-net-worth investors.”
To start the process, applicants must pay a nonrefundable deposit of $999 in Bitcoin and Ether, followed by an unspecified “know your customer” process. The statement includes a government link to an application page, with a banner that says “Powered by Tether.”
The program comes alongside concerns from Salvadorans that an influx of tourists, especially in coastal cities like El Zonte attracting the crypto crowd, is pushing out lower-income families. In late November, local publication Mala Yerba reported that 25 families were facing eviction in El Zonte for the construction of a public park called “Bitcoin Beach Club de Playa.”
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FAQs
El Salvador took a different path toward digital payments. In 2021, in order to promote financial inclusion and job creation and facilitate remittances, it became the first country to adopt Bitcoin as a legal tender.
Does El Salvador offer citizenship to bitcoin holders? ›
The government of El Salvador has passed a law granting citizenship to bitcoin investors who make a donation to the government. Investors will receive expedited citizenship in return for their donations. The law was passed on December 21, 2023.
Which country was the first to accept cryptocurrency? ›
El Salvador became the first country to accept Bitcoin as legal tender.
What is the impact of cryptocurrency adoption as a legal tender in El Salvador? ›
On 7 September 2021, with the decision to make Bitcoin legal tender, El Salvador became the first (and still only) country in the world to officially adopt a crypto asset as national currency. The main aim of this measure, according to the 'Bitcoin Law', is to improve the population's access to financial services.
How much has El Salvador lost in bitcoin? ›
The volatile bitcoin price resulted in El Salvador's bitcoin investments having lost approximately US$45 million with a bitcoin balance worth about US$76.5 million by September 2023. Mass adoption has been slowed by the absence of a coherent educational process across the country.
How much is El Salvador bitcoin worth? ›
How Much Bitcoin Does El Salvador Have?
| Entity | Value Today |
|---|
| El Salvador | $350,705,716 |
Salvadoran citizens who naturalize in the United States may keep their Salvadoran citizenship only if they were born in El Salvador. (See more info about dual citizenship in the USA and El Salvador.)
How much does it cost to get Salvadoran citizenship? ›
this approach could imply investing at least 100,000 USD in a qualifying investment; citizenship by investment in El Salvador may be available after 5 years of living here.
What is the cheapest citizenship by investment? ›
Cheapest Countries to Buy Citizenship
- Antigua and Barbuda. A lush island paradise with 365 beaches of clean, clear, turquoise waters, Antigua and Barbuda is an attractive place to live or to own a second home in, with excellent air links to North America and Europe. ...
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For tax purposes, Bitcoin is usually treated as property rather than currency. However, exceptions exist, such as El Salvador, the first country to recognize Bitcoin as legal tender in June 2021.
Is bitcoin mining legal? According to TheStreet, reporting on a November 2021 Law Library of Congress report, bitcoin mining is banned in various countries, such as Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and more. However, it is legal in the US, and most countries, but not all US states allow the same.
Which country is the best to start cryptocurrency? ›
Top 10 Crypto-Friendly Countries
- Malta. With its progressive regulations and advantageous tax structure, Malta, also known as Blockchain Island, is attracting large companies in the crypto coins industry. ...
- Singapore. ...
- Portugal. ...
- Switzerland. ...
- Estonia. ...
- Germany. ...
- Slovenia. ...
- Canada.
Bukele claimed it would be a boon for financial inclusion, investment, innovation, and economic development. El Salvador´s $27 billion economy suffered from persistently low growth, high public debt, and a strong dependence on remittances, which could potentially become cheaper and faster to access in bitcoins.
Does El Salvador tax crypto gains? ›
El Salvador crypto tax
El Salvadorian residents can also use Bitcoin to pay debts and any other obligations previously expressed in USD. As Bitcoin is legal tender, it is exempt from capital gains tax in El Salvador.
How does El Salvador affect the environment for Bitcoin? ›
The electricity consumption for bitcoin mining has reached an all-time high. The environmental concerns are rising. However, El Salvador is keen on using 100% clean energy sources. El Salvador has been producing the largest amount of geothermal energy in all of Central America.
Why did El Salvador adopt the US dollar? ›
El Salvador: El Salvador switched to the US dollar in 2001 for economic stability. Palau, the Marshall Islands, and the Federated States of Micronesia: Palau, the Marshall Islands, and the Federated States of Micronesia all use the US dollar as part of the Compacts of Free Association agreements.
What is El Salvador known for? ›
Known as the Land of Volcanoes, El Salvador has frequent earthquakes and volcanic activity. It is the only country in Central America that does not have a coastline on the Caribbean Sea. Known as the "land of volcanoes," El Salvador has frequent earthquakes and volcanic activity.
How many bitcoins does El Salvador own? ›
El Salvador, the nation that made bitcoin legal tender in 2021, continues to up its bitcoin (BTC) holdings. The country's president, Nayib Bukele, said on Monday that the nation now owns 5,700 bitcoins versus mid-March's roughly 5,690.
What is El Salvador known for producing? ›
The most important agricultural products in El Salvador are coffee, cotton, corn (maize), and sugarcane.
