Thursday, June 10, 2021

El Salvador adopts Bitcoin (June 10, 2021)

El Salvador is the first country in the world to make Bitcoin legal tender. Lawmakers approved the move Tuesday night with 62 out of 84 of the legislature’s votes, just days after President Nayib Bukele made the proposal at a Bitcoin conference. (See Monday's briefs.)

The law effectively means the cryptocurrency can be used as payment for goods or services unless a business cannot provide the tech required to facilitate the transaction. The U.S. dollar will continue to be El Salvador’s main currency and no one will be forced to pay in Bitcoin, according to the legislation. The law would create mechanisms to help Salvadorans, especially small businesses, quickly convert payments they receive in Bitcoins into dollars — helping them avoid the risk of the value plummeting, reports the New York Times

Bitcoin is known for wild price swings that have prompted critics to suggest it is not suitable to be an effective currency, reports CNBC. It’s still unclear how El Salvador will ultimately roll out bitcoin as legal tender.

Bukele has previously said this will make financial services accessible to the 70% of Salvadorans who do not have bank accounts and ease the transfer of remittances from abroad that make up around 20% of the country’s GDP.  Because people can transmit bitcoin to relatives and businesses on their smartphones, without the need for a bank account, he argues the move to make Bitcoin legal tender could help achieve the “moral imperative” of financial inclusion.

Salvadoran emigrants send $6 billion home in remittances each year, mostly through middlemen who take cuts as large as 20 percent. “By using bitcoin,” tweeted Bukele, “the amount received by more than a million low income families will increase in the equivalent of billions of dollars every year.”

Bitcoin entrepreneurs have been working on implementation to make bitcoin a feasible means of exchange for everyday purchases, reports Forbes. (Coindesk delves more into definitions of "legal tender.")

But experts have said the move to Bitcoin could complicate talks with the IMF, where El Salvador is seeking a more than $1bn program. They also voiced concern about potential tax evasion concerns, reports Reuters.

Is it the beginning of a trend? An increasing number of Latin American lawmakers are donning Laser eyes on their Twitter avatars to express their support for Bitcoin and digital assets, notes Coin Telegraph. (The Street too.)

News Briefs

  • Haiti is grappling with its first serious outbreak of coronavirus -- and has not administered a single Covid-19 vaccine. Last month, infections and fatalities rose more than fivefold following the arrival of new variants, in what the Pan American Health Organization (PAHO) called a "cautionary tale in just how quickly things can change with this virus," reports Reuters.
  • Deadly clashes between rival gangs in the Port-au-Prince metropolitan area seeking to exert control over populous areas have surged in recent weeks, with a significant upsurge since the beginning of the month. Preliminary estimates suggest that thousands of people have fled their homes and sought shelter with host families or settled in informal shelters, according to the UN Office for the Coordination of Humanitarian Affairs. (See Tuesday's briefs.)
  • The Nicaraguan government's crackdown against political opponents continued yesterday, with police arresting another prominent opposition activist, José Pallais. (See yesterday's post.) Overall, in the past week, the police jailed or put under house arrest four opposition presidential candidates, along with the spouse of one of the candidates, a prominent social activist and a business leader, reports the New York Times.
  • Most of the latest political detainees have been held under Nicaragua’s so-called “Guillotine Law,” which since late last year has allowed the government to accuse any citizen of working for foreign powers and fomenting unrest without having to produce evidence. (See Monday's post.) In another sign of a broadening crackdown, prosecutors have questioned nearly 30 journalists in alleged money-laundering cases in recent weeks, threatening to stifle the last independent media in the country, reports the New York Times.
  • The death on Tuesday of yet another young Black favela resident during a raid by heavily armed police has prompted an outburst of fury in Brazil – and fresh calls for a rethink of the so-called war on drug gangs. Kathlen Romeu, a 24-year-old pregnant woman was struck by a single stray bullet during a confrontation between officers and criminals. (Guardian)
  • The gang-rape and torture of a 22-year-old gay man in Florianópolis has prompted fierce reaction in Brazil and is evidence of a growing tide of hate crime in the country, according to human rights campaigners. Three armed men used sharp objects during the assault last week and forced him to carve homophobic slurs into his legs, said activists. Brazil has one of the most alarming rates of violence and discrimination against LGBT people in the world, reports the Guardian.
  • JBS, the world’s biggest meat processor, has paid an $11m ransom after a cyber attack shut down operations, including abattoirs in the US, Australia and Canada. (Guardian)
  • The lurid story of an evangelical superstar from a favela who made it to Brazil's congress and is now accused of murdering her husband -- Guardian Long Read.
Regional Relations
  • Chinese pharmaceutical executives reportedly told Brazil's government to refrain from criticizing China in order to avoid delays in vaccine ingredient shipments. While SinoVac executives did not say China's government was directly interfering, they indicated a fluid relationship between the two countries' leadership would be more conducive for the commercial agreement, according to cables from the Brazilian embassy in China presented at Senate investigation commission into the Bolsonaro administration's handling of the pandemic. (InfobaeReuters)
  • Iran rejected as interference a reported U.S. monitoring of Iranian navy vessels that may be headed to Venezuela, reports Reuters.
  • The issue of migration is dividing U.S. Democrats after U.S. Vice President Kamala Harris warned Central Americans not to embark on dangerous journeys north -- a stance lawmaker Alexandria Ocasio-Cortez branded as disappointing, arguing that seeking asylum at the U.S. border is “a 100% legal method of arrival.” (The Hill, see Tuesday's briefs.)
  • The U.S. war on drugs bears significant responsibility for Colombia's ongoing cycle of conflict, by providing the military equipment now being used by security forces to forcibly quell dissent, writes Kyle Longley in the Washington Post.
  • Strengthening the care economy is a condition for development in Argentina, writes Mercedes D'Alessandro, Director of Economy, Equality and Gender in the country's economy ministry. During the pandemic Argentina has carried out a series of stop-gap measures aimed at alleviating poverty, which take into account the disproportionate effect on female-led households. But other policies aim at investing in care infrastructure and stregthening female participation in productive sectors, she details in a Cronista column.
  • Argentine President Alberto Fernández set off a Twitter storm and regional race debate after commenting to the Spanish prime minister that: "The Mexicans came from the Indians, the Brazilians came from the jungle, but we Argentines came from the ships. And they were ships that came from Europe." He thought he was citing Nobel laureate Octavio Paz, but the reference actually comes from an Argentine rock song. Regardless, the comments sparked a viral response on social media, with many criticizing the center-left leader for racial insensitivity, reports the Guardian. (Bolsonaro's response.)
Did I miss something, get something wrong, or do you have a different take? Let me know ... Latin America Daily Briefing

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