Tiny El Salvador has become Latin America’s success story, according to investment manager VanEck—thanks in large part to its Bitcoin-loving president.
A report by the New York firm said that the country’s bet on Bitcoin and radical reforms have turned it into “Latin America’s ultimate comeback story.”
El Salvador was a little-known and crime-ridden country before its millennial president, Nayib Bukele, became leader in 2019.
His maverick way of doing things—including making Bitcoin legal tender in the nation in 2021 and building a mega prison—led to criticism from a number of institutions, U.S. politicians, and human rights groups.
But it’s paying off, according to VanEck.
“From fiscal reforms to Bitcoin adoption and energy innovation, the nation has defied global skepticism and achieved measurable success—whether through USD bond performance, GDP growth, or Bitcoin valuation, boosting its reserves,” reads a report by the firm’s head of digital assets research, Matthew Sigel.
He added that the country has “defied global skepticism” by introducing Bitcoin to its citizens, and now 8% of Salvadorans have used the cryptocurrency to make payments.
Previous studies and even a visit by Decrypt to the country have concluded that Bitcoin was not of much interest to Salvadorans. But that is changing, according to the report.
“The integration of Bitcoin into daily life is creating a foundation for broader acceptance and innovation in financial technology,” the report read. It added that a Trump administration in the U.S. will help, too.
“With Trump’s well-documented support for Bitcoin and focus on reshoring and ‘friend-shoring’ supply chains, El Salvador could emerge as a strategic partner in U.S. efforts to build regional alliances,” it said. President-elect Donald Trump ran a crypto-friendly campaign in his run up to his shock November 5 win.
Sigel told Decrypt that other countries in the region would likely follow suit, and that the “the trend towards greater [Bitcoin] adoption at the sovereign level seems well in place.”
President Bukele has bought Bitcoin using the country’s coffers, which has paid off since the asset’s price has surged. It now holds over 5,900 Bitcoins worth $546.6 million, according to SpotOnChain data. The country also mines the cryptocurrency.
Bukele—whose social media persona is a cocky millennial who likes to insult the International Monetary Fund—has been praised by citizens for cleaning up crime in the country. But human rights groups like Amnesty have criticized Salvadoran authorities for the alleged “systematic use of torture and other mistreatment” of prisoners.
Sometimes while in the toilet… https://t.co/KKdCtBxcv1
— Nayib Bukele (@nayibbukele) March 24, 2022
Once one of the most violent countries in the world, President Bukele imprisoned 2% of the nation’s population, leading to a plunge in the murder rate.
The small country—popular with surfing backpackers—is now trying to attract tech investment and even offers a so-called “freedom visa” for crypto enthusiasts.
Edited by Stacy Elliott.
