The nation in Central America, led by Nayib Bukele, has teamed up with the controversial stablecoin Tether for a new venture. On Thursday, the El Salvadoran government, in collaboration with Tether, introduced a joint initiative named “Adopting El Salvador Freedom.” This program allows foreigners to acquire a Salvadoran passport by paying $1 million in Bitcoin.
El Salvador’s Bitcoin Adoption and Challenges
El Salvador made headlines in 2021 by becoming the first country to adopt Bitcoin as legal tender. This move mandated businesses to accept Bitcoin as a form of payment and introduced a digital wallet called “Chivo,” encouraging citizens to participate with a $30 sign-up bonus in Bitcoin.
The initiative faced backlash from Salvadorans who expressed concerns about President Nayib Bukele’s autocratic tendencies. Adoption of Bitcoin was slow, with the majority of citizens sticking to traditional cash. Additionally, Bukele’s allocation of tens of millions in federal funds to Bitcoin proved problematic, as its price plummeted from an all-time high of around $69,000 in November 2021 to under $17,000 at the beginning of 2023.
El Salvador as a Magnet for Bitcoin Enthusiasts
Despite the challenges, El Salvador has become a destination for Bitcoin enthusiasts worldwide. The country’s commitment to cryptocurrency attracted prominent figures in the Bitcoin community, such as Swan Bitcoin, which established a presence in El Zonte, a surf town credited with initiating the country’s Bitcoin experiment.
The significant reduction in crime has been attributed to Bukele’s controversial policy of imprisoning alleged gang members, which has further enticed Bitcoin supporters to visit the country.
New Phase in El Salvador’s Bitcoin Commitment
Thursday’s announcement marks a new chapter in El Salvador’s Bitcoin commitment, fueled by Bukele’s unverified claim that his Bitcoin investment has become profitable due to a recent price rally.
The Bukele administration has a longstanding partnership with Bitfinex, a Tether-affiliated company. Tether, the leading stablecoin pegged to the U.S. dollar, has faced scrutiny for its lack of transparency and offshore jurisdiction. In April, Bitfinex became the first company to receive a license in El Salvador’s crypto regulatory regime and was chosen by the government to help launch a delayed Bitcoin-backed bond.
Tether’s Visa Program and Concerns
According to Tether’s statement shared with Fortune, the new visa program allows participants to obtain a Salvadoran passport through a one-time payment of $1 million in Bitcoin, described by the company as an “investment.” However, the destination of the funding remains unclear. The program is targeting “visionary individuals,” including high-net-worth investors.
To initiate the process, applicants must pay a nonrefundable deposit of $999 in Bitcoin and Ether, followed by an unspecified “know your customer” process. The statement includes a government link to an application page, with a banner stating “Powered by Tether.”
Community Concerns and Potential Displacement
This initiative raises concerns among Salvadorans about the potential displacement of lower-income families due to an influx of tourists, particularly in coastal cities like El Zonte, which is attracting the crypto crowd. In late November, local publication Mala Yerba reported that 25 families were facing eviction in El Zonte for the construction of a public park called “Bitcoin Beach Club de Playa.”
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