Lack of Transparency Hampers BTC Adoption in El Salvador, Critics Say

Last Tuesday, December 7, completed three months since El Salvador adopted BTC as its official currency. However, according to information from local portals, the adoption of cryptocurrency among Salvadorans continues to face challenges.

According to a report by EFE, published by the portal elsalvador.com, these three months of adoption were marked by the low acceptance of the BTC among Salvadorans.

This is because there would have been no transparency in the management of resources for the purchase of Bitcoins.

In addition, there were hundreds of reports of alleged identity theft for receiving the $30 bonus in BTC given by the government.

BTC in El Salvador

As reported by the Salvadoran portal, in these 90 days, President Nayib Bukele took advantage of the BTC price drops to “fill the coffers”. In all, 1,370 Bitcoins were purchased, which are currently worth US$ 68,371,200.

However, it seems that it is not known which budget item these resources came from. Nor is there information about the management and administration of this money, something that should be public knowledge.

Furthermore, the portal cites Bukele’s “Bitcoin City” project, which will be financed by BTC bonds to be issued soon.

The idea is that the city, which will be built near the Pacific on the Gulf of Fonseca, will be tax free. The only exception would be the 10% value added tax (VAT).

According to what is known of the project so far, the government would have to issue $1 billion in bonds to get the city off the ground. Of this amount, half would be earmarked for the purchase of BTC and the other half for the city’s infrastructure.

Bitcoin City is a risky project

However, economist Ricardo Castaneda, from the Central American Institute of Fiscal Studies, said that the project is “risky”. He pointed out that the announcement that El Salvador will use BTC-backed securities is actually “a desperate move.”

According to him, a kind of exchange would have to be created in El Salvador where these bonds would be placed.

“If it works, President Bukele will be an example. He will be able to tell multilateral organizations and the international community that we do not need them. But if it goes wrong, the entire population will lose”, he warned.

The economist also said that the Bitcoin City ad “is like selling an illusion to bitcoiners”:

“Let’s see if the Bitcoin City ad is really so powerful as to make bitcoiners fall in love and practically turn a blind eye to reality and lend the money to the government. The challenge is very big.”