El Salvador’s Economy Minister, Maria Luisa Hayem Brevé, has introduced a new Digital Assets Issuance Bill.
The proposed legislation intends to create a National Digital Assets Commission to supervise the licensing of companies that create digital assets, as well as other parties involved in the “public offering process” of digital securities.
Under the direction of President Nayib Bukele, it became the first country in the world to formally recognize bitcoin as a legal tender in 2021. Bukele also announced plans to issue bonds backed by bitcoin for $1 billion.
A growing number of establishments, including hotels, restaurants, pool halls, and even street vendors, now accept bitcoin payments. While larger companies use Bitcoin as a marketing tool, smaller vendors utilize it for minor transactions and just to hold it as an investment.
Why does Argentina Require Bitcoin Bonds?
In Argentina, alternatives are being sought as a result of the peso’s sharp depreciation. The best currency substitute, at the moment, appears to be cryptocurrency.
Due to its rising popularity, one-third of Argentines now trade cryptocurrencies at least once every month. Many of them believe that the short-term volatility of cryptocurrencies is preferable when compared to the national currency’s rapid devaluation.
Samson Mow, CEO of JAN3, contends that Argentina needs to introduce Bitcoin bonds and use the digital currency as legal tender. These Bitcoin bonds could help raise money for an alternative source of income, the revenues of which could be used to pay bond coupons and purchase more Bitcoin.
The peso is rapidly depreciating as a result of a complicated web of policies that have failed to stabilize its value. Mow has even gone to the extent to claim that Bitcoin might eventually take the place of the peso as the nation’s currency.
Argentines can mine Bitcoin using relatively inexpensive natural gas and energy from untapped hydroelectric sources, similar to El Salvador, which uses geothermal energy generated by volcanic activity.
The Public Opinion
Argentines have viewed the US dollar as a long-term safe asset. However, government regulations disturbed this practice. They impose high taxes on dollar-denominated transactions and limit dollar purchases to $200.
Despite its volatility, Argentines increasingly favor Bitcoin over the peso and the dollar.