El Salvador's Vice President, Felix Ulloa, has touted the country's Bitcoin reserves as evidence that El Salvador is a model for financial freedom and the digital economy. Ulloa made the statement during a recent discussion with Chinese Ambassador Zhang Yanhui.
Felix Ulloa – Vice President of El Salvador
According to a post on platform X, Ulloa mentioned that El Salvador's Bitcoin reserves are currently valued at over $500 million during a meeting with Yanhui. The meeting focused on strengthening relations between the two countries and the strategies that have helped El Salvador become a model for economic development and innovation.
Ulloa believes that the success of the Bitcoin policy is due to El Salvador's National Bitcoin Office and President Nayib Bukele, emphasizing that this innovative approach has brought significant change to the country.
“Mr. President is not afraid to step outside the comfort zone. He has proven that, despite what people say is impossible, there is always a way to transform the country for the benefit of the people.”
Meanwhile, discussions about the relationship between El Salvador and China also focus on other issues, including air and digital connectivity. According to Vice President Ulloa, El Salvador is building digital infrastructure to become a regional leader in connectivity and technology.
El Salvador plans to strengthen its Bitcoin policy
El Salvador has every reason to be proud of its Bitcoin policy, especially as this bold investment has brought significant returns to the country. In 2021, when it first accepted Bitcoin, the idea of a sovereign nation using Bitcoin as a reserve asset was seen as a bold and unprecedented move. This had previously raised concerns that it could exacerbate the country's economic challenges.
However, the decision to disregard criticism has proven wise, as Bitcoin's price has increased significantly this year, reaching $100,000 for the first time. Although the price has now dropped to $97,983, El Salvador still records profits from its investment in BTC.
BTC price chart 4 hours | Source: Tradingview
The country has decided to continue ramping up its Bitcoin buying strategy, with reports indicating that President Nayib Bukele is temporarily aiming to add an additional 20,000 BTC to its reserves. Signs of increased activity have appeared, as data from Arkham Intelligence shows that El Salvador has purchased 11 Bitcoin twice in the past week, ending a buying streak of 'one Bitcoin per day' that President Nayib Bukele announced in November 2022.
Interestingly, the success of the Bitcoin strategy along with other economic and social policies has also improved El Salvador's financial situation, allowing them to access funding from the International Monetary Fund (IMF). Recently, El Salvador reached a loan agreement of $3.5 billion from the IMF and other international organizations.
Countries are jumping on the Bitcoin trend as calls for acceptance in the U.S. escalate
The relative success of the Bitcoin policy in El Salvador, along with the increasing value of this coin, has sparked speculation that many other sovereign nations will adopt Bitcoin as a reserve asset. Leading the list is the United States, where multiple stakeholders have begun debating this possibility.
According to analysts from VanEck, the United States is building a strategic Bitcoin reserve based on the BITCOIN Act proposed by Senator Cynthia Lummis. This reserve could account for 36% of the U.S. national debt by 2050, while strengthening the power of the U.S. dollar. However, concerns remain about whether Congress will pass legislation allowing Bitcoin to become a reserve asset.
In response, experts at the Bitcoin Policy Institute argue that there may be no need to change the law for the U.S. to buy Bitcoin. They assert that the Treasury, through the Secretary, could use the Exchange Stabilization Fund (ESF) to purchase Bitcoin with the President's approval.
While discussions continue about whether the U.S. government could buy or turn Bitcoin into a reserve asset, the Kingdom of Bhutan in South Asia has accumulated a large amount of Bitcoin through mining and currently holds over 12,000 BTC. Other countries such as the United States, China, the United Kingdom, and Ukraine also hold BTC, primarily through seizures and donations.
However, no major country has officially accepted Bitcoin as a reserve asset. Nevertheless, reports have emerged indicating that some countries, including Russia and several Middle Eastern nations, are also considering this possibility.
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