Some Salvadorans Remain Behind Bukele’s Bitcoin Policy Despite Warnings

Some Salvadorans have expressed support for their country’s adoption of Bitcoin as legal tender, per France 24. 

“It has been a very, very good experience and increased our sales. It has taken us to another level of business,” Karen Hernandez, who sells mobile phone accessories in El Salvador, told France 24. 

“We give the customers a little orientation on how to use the wallet. Once they learn how to use it, they buy something from us. It’s a win-win situation,” Elizabeth Arevalo, who works in a computer store, also said. 

The news comes amid the International Monetary Fund’s (IMF) latest warning directed at El Salvador. 

El Salvador’s Bitcoin adoption “entails large risks for financial and market integrity, financial stability, and consumer protection. It can also create contingent liabilities,” the IMF said. 

El Salvador’s president, Nayib Bukele, responded with a meme on Twitter.

IMF, JPMorgan criticize Bukele’s venture

While some business owners have recently shown support for Bitcoin as legal tender, the president’s policy has been mired in controversy since it was first announced last summer. 

Tuesday’s warning from the IMF is not the first either. Last June, the organization said Bitcoin’s legal tender-designation raised several “macroeconomic, financial and legal issues.” 

In the same month, the World Bank also chimed in, refusing to help El Salvador establish the cryptocurrency in its economy over transparency and environmental issues. 

Even the Bank of England and JPMorgan have shared concerns. “It’s difficult to see any tangible economic benefits associated with adopting Bitcoin as a second form of legal tender,” analysts at JPMorgan said. 

Most recently, Moody’s Investors Service analyst Jaime Reusche said that the fact the Salvadoran government trades in Bitcoin is “quite risky, particularly for a government that has been struggling with liquidity pressures in the past.”

El Salvador is facing an $800 million bond that matures in January 2023, and there are widespread doubts about whether the country will be able to pay back its debt. 

Is Bitcoin popular in El Salvador?

Criticism is not just coming from abroad either; it’s also coming from within El Salvador itself.

Fruit vendor Antonio Molina told France 24, “I couldn’t care less if they ditch Bitcoin or not, there’s no benefit to me, I only work with the dollar, I don’t accept Bitcoin.” 

In December 2021, Salvadorans reported Bitcoin balances vanishing from their Chivo wallets, the state-backed crypto wallet supporting the venture. 

Last summer, Salvadorans protested on several occasions against Bitcoin adoption. Universities also produced surveys showing that most Salvadorans did not believe in Bukele’s Bitcoin embrace. 

Jaime Guevara, the deputy leader of El Salvador’s opposition party, the Farrabundo Marti National Liberation Front, also filed a lawsuit against the government because the Bitcoin Law—which mandates the use of Bitcoin—was unconstitutional. 

“There are so many things that are not being disclosed. For example, who’s holding the private keys to these Bitcoin? Also, what’s the criteria for saying, ‘Oh, today, we’re going to buy more Bitcoin, or we’re going to wait until next month.’ We don’t know that” Nolvia Serrano, head of operations in El Salvador for BlockBank, previously told Decrypt. 

“The government has harassed big business and small business alike. They’ve sent government agents to inspect businesses to ensure they are following labor regulations just because C-level executives have said negative things about the Bitcoin law,” one local businessperson previously told Decrypt on the condition of anonymity.”

Until these concerns are addressed, it may be some time before a larger portion of Salvadorans supports their president’s crypto ambitions.