El Salvador is apparently buying a bitcoin a day. But we may never know if that’s true.
In fact, since making the cryptocurrency legal tender last year, the country has failed to officially declare any of its holdings and now likely has unrealized paper losses with bitcoin's price drop of about 71% over the past year.
The public has had to rely on President Nayib Bukele’s word — or more specifically, his tweets — to find out when he’s buying bitcoin, how much and at what price.
The lack of information is an “absolute opacity about the use of public funds” related to bitcoin, said Ruth López, head of anti-corruption and justice for human rights organization Cristosal. The government's move to make the information confidential not only goes against El Salvador’s constitution but puts the country in violation of international human rights treaties, she said.
“The lack of transparency leaves citizens without knowing the beneficiaries, quantities or reasons for granting the funds,” Cristosal said.
The questions about El Salvador’s bitcoin finances come as the country faces $800 million debt that’s due in January. Meanwhile, the country's lawmakers are considering legislation aimed at regulating digital asset providers and issuers that will help lead to its long-awaited plan to issue $1 billion in bitcoin-backed bonds using blockchain technology.
Based on Bukele’s social media posts, El Salvador has purchased 2,381 bitcoins — not counting the one bitcoin every day he announced earlier this month. Beyond that, there is no official or public record of how much El Salvador has spent so far.
Some have made their own DIY attempts to quantify these amounts.
One of the most popular, Nayib Bukele Portfolio Tracker, estimates that the country has spent more than $107 million on bitcoin and would have lost more than $67 million so far based on current prices. The same website had pegged El Salvador’s estimated losses at $18 million in February.
“Unfortunately, there is no official information so that one can really know how much bitcoin the government has bought,” Central American Institute for Fiscal Studies (ICEFI) economist Ricardo Castaneda told The Block in a WhatsApp voice message.
Bukele and his finance minister Alejandro Zelaya have downplayed estimated losses in the country’s bitcoin portfolio, arguing that it has not actually lost money because it hasn’t actually sold any bitcoin. Bukele even told followers in June to “stop looking at the graph and enjoy life” as bitcoin prices plunged. That same month, Zelaya said that the country had sold “a part” of its bitcoin to fund its much-hyped veterinary Chivo Pets hospital.
In an effort to get official information, The Block submitted a records request to El Salvador’s development bank, Bandesal, in September through a third party. The document included questions about bitcoin purchases, current balances, wallet addresses, contractors and exchanges it has used to purchase bitcoin.
The government denied the inquiry saying the information was not public because it related to the government trust fund and its funds were “reserved information,” citing an article in Bandesal’s laws that considers information about the bank’s operations and funds to be confidential.
Liduvina Escobar, former commissioner of El Salvador’s Institute for Access to Public Information, told The Block she believes the information should be made public and the constitutional court should nullify this article when it concerns public funds.
“Due to the nature of public interest that the issue deserves, this article suffers from being unconstitutional,” said Escobar, who was removed from her role last year in a move she says was unjustified.
Cristosal, the human rights organization, filed three legal actions this month aimed at increasing transparency about El Salvador’s use of funds toward bitcoin-related endeavors.
That doesn't seem to have affected Bukele, who has high approval ratings. But in a September poll of more than 1,260 people done by the Central American University in El Salvador, 77% responded that they think the government should not continue spending public funds on bitcoin.
Based on the few figures scattered across budgetary documents, El Salvador appears to have earmarked hundreds of millions of dollars for bitcoin-related projects.
Salvadoran digital newspaper El Faro reported last year that this figure was $203.3 million, based on three line items — $150 million toward a government trust fund to help facilitate bitcoin adoption, $30 million to fund the $30 in free bitcoin for people who opened Chivo Wallet accounts, and another $23 million toward a program called “criptofriendly” to finance the implementation of the bitcoin law that the government has not mentioned by name since.
More than 4 million authentic Chivo accounts have been created, meaning the government would have had to have spent more than $120 million on the $30 signup bonuses. That’s four times what it reportedly originally allocated.
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