By approving bitcoin as legal tender and announcing plans to build a “Bitcoin City,” El Salvador is one step ahead of everyone else in pushing the mainstream adoption of bitcoin. This seems to be a threat to other countries, including the United States, according to El Salvador’s Ambassador to the United States, Milena Mayorga.
“They are afraid and concerned because a lot of countries are looking at us and they will follow our leadership,” Mayorga said in an interview with CoinDesk TV’s “First Mover” on Wednesday.
In September, El Salvador adopted bitcoin as legal tender, sending shockwaves through the international monetary establishment. That, and other increasingly ambitious plans to put bitcoin at the center of its economy, are wagers that America’s global influence is waning.
“I know the concerns here in [Washington,] D.C. are about losing the power of the dollar and we can understand that, but El Salvador has to move on [because] it wants to be on a different level,” she added. El Salvador adopted the U.S. dollar as legal tender in 2001 after the failure of its native currency, the colón.
Concerns about El Salvador’s monetary experiment are widespread. On Tuesday, the International Monetary Fund (IMF) urged El Salvador to strengthen the regulation and supervision of bitcoin use in the country, noting the “significant risks” that come with the cryptocurrency.
El Salvador will be closely watched in 2022. Besides its recently announced “Bitcoin City,” a low-tax, legal municipality pitched as a mecca for wealthy bitcoin investors, the Central American country plans to raise $1 billion via a bitcoin bond, a tokenized financial instrument in partnership with Bitcoin infrastructure company Blockstream.
Although no other country has yet to follow El Salvador in putting bitcoin on the same level as the U.S. dollar, many are beginning to think seriously about digital currencies. Neighboring Honduras and Guatemala, for instance, are both studying central bank digital currencies (CBDCs).
So far, the Biden Administration has been mum about what’s happening south of the U.S. border. “We have to have the conversation,” Mayorga said, “but we are an independent country, so [the U.S. has] to accept our movement and understand that we want to take ourselves to a different level and with a definitional system.”