The Central American country chose Bitcoin as the center of its strategy for economic revitalization in 2021. Following this, the exchange Bitfinex donated 36 bitcoin and $600,000 to small Salvadoran businesses in order to support economic development in neighborhoods that have suffered gang violence.
The funds that Bitfinex donated are earmarked for distribution in the socially disadvantaged communities of Ilopango, Soyapango, and Apopa. These areas were particularly hard hit by gang violence and gang extortion of small businesses. These donations are funded through the recipients’ bitcoin wallets, including the state-sponsored Chivo wallet. The funds are intended to support “environmentally friendly” business initiatives that employ local workers.
For its part, Bitfinex’s parent company, iFinex Inc., is working together with the government of El Salvador to create a new regulatory framework for digital assets and securities.
Bitcoin Development on Multiple Fronts
El Salvador increased its treasury reserves of the digital asset through several “purchases of the dip” in recent times. Recall that this country accepted bitcoin as legal tender in June 2021. From there to date, its commitment to adoption is becoming more accentuated, currently holding 2,301 BTC.
While signs of adoption by businesses have been mostly mixed, the Chivo wallet has gained popularity for its practicality in facilitating remittances. As reported by the Central Reserve Bank of El Salvador, during the first five months of 2022, Salvadorans living abroad sent a total of $52 million in remittances to the country.
On the other hand, El Salvador is also planning an offering of the so-called Volcano Bonds for a value of $1 billion. The bitcoin-backed bond is intended to be tokenized by Bitfinex and Blockstream, and the proceeds will be earmarked for the development of “Bitcoin City.”
What is Bitcoin City?
Bitcoin City is a project launched by Salvadoran President Nayib Bukele to create a new low-tax economic triangle in collaboration with neighboring countries and attract bitcoin businesses to incorporate, as reported in November 2021. It is devised so that the only tax to be paid there will be VAT, where half will be used to pay the bonds of the municipality and the rest for public infrastructure and maintenance of the city.
