20 Dec, 2024

El Salvador’s Bitcoin Strategy

El Salvador continues to make headlines as it redefines its Bitcoin strategy amid a $1.4 billion agreement with the International Monetary Fund (IMF). While the deal introduces limitations on Bitcoin-related government activities, the nation maintains its commitment to the cryptocurrency as a cornerstone of its financial vision.

$1 Million Bitcoin Purchase Boosts Strategic Reserve

El Salvador recently acquired an additional 11 BTC, valued at $1 million, bringing its Strategic Bitcoin Reserve to 5,980.77 BTC. This purchase deviates from President Nayib Bukele's previous "one Bitcoin a day" strategy, introduced in 2022. With Bitcoin trading at approximately $97,000, the nation's total Bitcoin holdings are now worth an estimated $580 million.

IMF Key Reforms to Bitcoin Adoption Policies

The IMF agreement, pending formal board approval, introduces several significant reforms, including:

● Voluntary Bitcoin Adoption: Businesses are no longer mandated to accept Bitcoin.

● Tax Payment Restrictions: Bitcoin will no longer be accepted for tax payments.

● Phase-Out of Chivo Wallet: The government-backed wallet will be discontinued, with private sector solutions expected to take its place.

● Limited State Bitcoin Transactions: Further state-led Bitcoin purchases or initiatives are curtailed.

These measures aim to balance El Salvador’s pioneering Bitcoin policies with global financial norms, addressing criticisms previously raised by the IMF about the risks associated with cryptocurrency adoption.

Bitcoin Remains Legal Tender Despite Reforms

Stacy Herbert, Director of the National Bitcoin Office, reaffirmed that Bitcoin remains legal tender in El Salvador. While the Chivo wallet will be phased out, the government anticipates that the private sector will step in with alternative Bitcoin wallet solutions, supporting ongoing cryptocurrency use.

El Salvador’s Fiscal Overhaul and Global Support

The IMF-backed agreement is part of El Salvador's broader fiscal restructuring strategy. Alongside the IMF, the World Bank and Inter-American Development Bank are expected to provide a combined $3.5 billion financing package, bolstering the nation’s financial stability.

El Salvador’s Role in Cryptocurrency Evolution

El Salvador became the first country to adopt Bitcoin as legal tender in 2021, a bold move aimed at enhancing financial inclusion. While the policy has faced international skepticism, it has sparked discussions about the potential of cryptocurrencies in national economies. Globally, Bitcoin’s market capitalization now accounts for 14% of gold’s, surpassing the total assets under management of U.S. gold exchange-traded funds.

Innovation Within International Guidelines

El Salvador’s recalibrated Bitcoin strategy reflects a commitment to innovation while aligning with international financial standards. As the nation continues to navigate its unique position in the global financial landscape, its approach serves as a case study for integrating cryptocurrencies into traditional economic frameworks.

18 Dec, 2024

Bloomberg Analysts Expect ‘A Wave of Cryptocurrency ETFs’ Next Year

Quick Take① Bloomberg analysts Eric Balchunas and James Seyffart are expecting a wave of new cryptocurrency-based ETFs next year after leadership takes over at the SEC.② Both predict that a host of new ETFs could launch including a bitcoin and ether combo ETF, Litecoin and HBAR funds, and then eventually spot funds for Solana and XRP.Bloomberg analysts expect 'a wave of cryptocurrency ETFs' next year, including Solana and XRP fundsBloomberg analysts Eric Balchunas and James Seyffart expect investors will likely have multiple new cryptocurrency-based exchange-traded funds to choose from next year."We expect a wave of cryptocurrency ETFs next year, albeit not all at once," Bloomberg's Senior ETF analyst Balchunas posted to X on Tuesday.Since Donald Trump was elected president in November, and Gary Gensler announced he'd be stepping down as chair of the U.S. Securities and Exchange Commission, optimism has been running high that new crypto ETFs might gain approval once the new administration takes over in January. Gensler was often viewed as resistant to embracing digital assets or crypto-based investment products even as some of Wall Street's biggest players launched spot bitcoin ETFs, which have attracted tens of billions of dollars in investment."Dual bitcoin and ethereum ETFs from Hashdex, Franklin [Templeton] and Bitwise will likely be the next spot crypto ETFs approved," Seyffart wrote in a note shared by Balchunas. "Both Solana and XRP ETFs will have to wait until the new SEC administration takes control before being seriously considered."Although proposals for launching either a Solana or XRP ETF have been filed there is little hope they will gain approval before Trump takes power and a new SEC chair is in place.Seyffart believes the odds are good that a Litecoin or HBAR ETF could be approved before the other new products, but added he wasn't sure "whether there's investor demand.""The SEC isn't calling Litecoin or HBAR a security anywhere," he said.Solana and even Dogecoin ETF filings are on the table in 2025, The Block previously reported. “I believe it’s highly likely that Solana ETFs will be approved by the end of next year at the latest," ETF Store President Nate Geraci said last month.Two Prime Digital Assets CEO Alexander Blume concurred, saying issuers "wouldn’t waste the time and expense to do this if they didn’t have a good sense that they will succeed.""Today's satire is tomorrow's ETF," Balchunas previously said. "You could ask yourself, 'is DOGE a bridge too far?' and I would say we'll see. I think someoneA's gonna try it because why not?"

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