If you are a crypto millionaire looking for a new place to call home, you might want to consider El Salvador. The Central American country, which made history by adopting Bitcoin as legal tender in September 2021, is now offering a range of incentives and benefits to attract long-term residents who are involved in the crypto space.
According to a recent report by CNBC, El Salvador is planning to launch a “Bitcoin City” near a volcano that will provide cheap and clean geothermal energy for mining operations. The city will also have a special tax regime, with no income, property, capital gains or payroll taxes for its residents. The only taxes that will apply are a value-added tax of 10% and a 10% tax on dividends.
To fund the construction of the city, El Salvador will issue $1 billion worth of Bitcoin-backed bonds, which will offer investors a yield of 6.5% and a 10-year maturity. The bonds will be sold in $100 increments, making them accessible to retail investors as well as institutional ones.
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But the Bitcoin City is not the only option for crypto millionaires who want to relocate to El Salvador. The country also has a residency-by-investment program that grants permanent residency to foreigners who invest at least $500,000 in real estate, agriculture, tourism or other sectors. Alternatively, they can obtain temporary residency by investing at least $150,000 in Bitcoin or other cryptocurrencies.
El Salvador’s president said the country’s bitcoin holdings are now profitable after the price rally
El Salvador’s president, Nayib Bukele, announced on Twitter that the country’s bitcoin holdings have turned a profit after the cryptocurrency surged to a record high of over last Wednesday. The Central American nation made history in September when it became the first country in the world to adopt bitcoin as legal tender, buying 400 bitcoins worth about $20.9 million at the time. According to Bukele, El Salvador now holds 1,120 bitcoins, valued at around $74 million, meaning that it has gained more than $50 million from its initial investment.
Bukele’s tweet was met with mixed reactions from his followers, some of whom praised his visionary leadership and others who criticized his risky gamble with public funds. Some also questioned the transparency and accountability of the government’s bitcoin transactions, as well as the environmental and social impact of the cryptocurrency.
Bukele has defended his decision to adopt bitcoin as a way to boost financial inclusion, attract foreign investment, and reduce remittance fees for Salvadorans living abroad. He has also claimed that bitcoin will help the country’s economy grow and create jobs.
However, not everyone in El Salvador shares Bukele’s enthusiasm for bitcoin. A recent survey by the Central American University found that 70% of Salvadorans do not trust or understand the cryptocurrency, and 80% prefer to use the US dollar, which is also an official currency in the country.
Many businesses and consumers have reported technical glitches and security issues with the government’s digital wallet app, Chivo, which offers $30 worth of bitcoin to every user who downloads it. Some have also complained about the lack of education and information on how to use bitcoin safely and effectively.
The adoption of bitcoin as legal tender has also raised concerns among international organizations and financial institutions. The International Monetary Fund (IMF) has warned that bitcoin could pose legal, regulatory, and macroeconomic challenges for El Salvador, and has urged the country to strengthen its fiscal and monetary policies.
The World Bank has declined to assist El Salvador with the implementation of bitcoin, citing environmental and transparency issues. The credit rating agency Moody’s has downgraded El Salvador’s sovereign rating, citing increased political and economic risks due to the bitcoin move.
Despite these challenges, Bukele has remained optimistic and confident about his bitcoin experiment. He has said that he expects more countries to follow El Salvador’s example and embrace the cryptocurrency as a global phenomenon. He has also hinted that he plans to use some of the profits from the country’s bitcoin holdings to fund social programs and infrastructure projects. Whether his bold bet will pay off in the long run remains to be seen, but for now, Bukele can celebrate his short-term gains as a crypto pioneer.
The residency-by-investment program aims to attract entrepreneurs, innovators and investors who can contribute to the economic development and social welfare of El Salvador. The program also offers other benefits, such as visa-free travel to more than 130 countries, access to public health and education services, and the ability to participate in the local political process.
El Salvador’s president, Nayib Bukele, has been a vocal advocate of Bitcoin and its potential to boost financial inclusion, economic growth and social justice in his country. He has also been courting the global crypto community with his vision of making El Salvador a hub for innovation and experimentation in the digital economy.
If you are interested in joining this crypto-friendly nation, you can find more information on how to apply for residency on the official website of the Ministry of Foreign Affairs of El Salvador. You can also follow the latest news and updates on the Bitcoin City project on its official Twitter account.
Argentina Initiates Drastic Economic Overhaul: Announces 54% Pesos Devaluation, Spending Cuts
Under the stewardship of President Javier Milei, Argentina has plunged into a whirlwind of economic reform. In a bid to resuscitate the ailing economy, the newly inaugurated government, led by Economy Minister Luis Caputo, announced a series of radical measures aimed at addressing the nation’s economic woes.
“There is no more money,” Caputo said repeatedly in the recorded video, adding that Argentina needs to solve its “addiction” to fiscal deficits.
Inflation is currently exceeding 140 percent on an annual basis, and there are expectations that prices will experience a further increase ranging between 20 percent and 40 percent in the coming months.
Currency Devaluation and Fiscal Reforms
The government executed a seismic devaluation of the peso, elevating the official exchange rate to 800 pesos per US dollar, marking a staggering 54% devaluation. Minister Caputo justified this move as a crucial step to counter the country’s deep-rooted fiscal imbalances and “addiction” to deficit spending.
In a pre-recorded address, Caputo emphasized the urgent need to curtail Argentina’s fiscal deficit addiction. The drastic devaluation was accompanied by sweeping spending cuts and policy changes:
- Halving the number of ministries.
- Drastic reductions in state subsidies for fuel, transport, and energy.
- Suspension of public works projects and state advertising for a year.
- Reduction of discretionary fund transfers to provincial governments.
Strategic Changes and Structural Reforms
The government announced a revamp of labor contracts, indicating that state labor contracts with less than a year in force would not be renewed. This move is expected to streamline state expenditure.
Moreover, the administration revealed plans to overhaul the nation’s import system, eliminating the need for prior approval for imports and aiming to usher in a more flexible and efficient system.
“This is the correct path,” declared Caputo, warning that continuing the status quo would lead Argentina into an even deeper crisis.
“We have to avoid catastrophe,” he said, due to “the worst inheritance” in the nation’s history.
Impact on Social Programs and Exchange Rates
Despite the stringent fiscal measures, certain social welfare programs will witness a boost. The child allowance will be doubled, and the Alimentar food card will see a 50% increase, providing some relief amid the economic turbulence.
Reactions and Economic Projections
Financial analysts and experts have divergent views on the government’s bold moves. While some foresee potential benefits such as job creation and enhanced productivity, others express concerns over the immediate hardships Argentines may endure amidst rising inflation and economic uncertainty.
The government’s closure of the export registry and restrictions on currency transactions heralded these dramatic economic shifts. The Central Bank signaled plans to lift transaction restrictions in the coming days.
For years, Argentine authorities have employed currency controls and import limitations to impede the peso’s decline in the official market, aiming to safeguard diminishing reserves. However, this mix of capital controls has resulted in the emergence of numerous exchange rates, hindering business operations and constraining investment in South America’s second-largest economy. During the campaign, Milei promised to eliminate the national currency entirely, advocating for its replacement with the US dollar.
President Milei had warned of impending hardships in his inauguration speech, citing inflation rates of over 140% annually, setting the stage for what could be a turbulent period of economic recalibration and adjustment for Argentina.
The shock therapy measures initiated by the Milei administration represent a bold attempt to steer the country away from economic catastrophe, although the road ahead seems fraught with challenges and uncertainties. While the reforms have raised concerns and sparked debates, financial analysts suggest that these bold measures may be necessary to stabilize the economy and attract investments.