Powers On … El Salvador is the unlikely leader for the sovereign adoption of Bitcoin as the national currency

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Turn on… is a monthly opinion column written by Marc Powers who, after serving with the SEC, spent much of his 40-year legal career handling complex securities cases in the United States. Today he is an adjunct professor at Florida International University College of Law, where he teaches a course on “Blockchain, Crypto and Regulatory Considerations”.

When I attended the Bitcoin 2021 conference in Miami two weeks ago, several things struck me as interesting and significant. While many others have already covered the conference, I will focus on a handful of comments or events that I think are important to the cryptocurrency and blockchain space.

At first the conference was full of church-like believers or those curious about crypto and bitcoin (BTC). Miami Mayor Francis Suarez opened the celebrations on a grand scale, noting that Miami was the first city in the United States to publish the 2008 Bitcoin white paper on its government’s website. As a transplanted New Yorker who now lives in Miami and teaches blockchain law to law students there, that made me proud.

When the moderator asked how many in the audience had attended this particular Bitcoin conference over the past few years, many hands of the 12,000 crowd went up. These participants were long-time owners, developers, investors and entrepreneurs. And they had a strong libertarian bias, as evidenced by the warmly received keynote address by Ron Paul, a former Senator from Texas, who said that “authoritarians” run our government and the Federal Reserve and take away our freedoms and rights. Impressive! I didn’t realize that Paul had radicalized that much, or had radicalized that way before.

MicroStrategy CEO Michael Saylor said that Bitcoin was the life force of the world. Draper Fisher Jurvetson founder Tim Draper commented that Bitcoin represents “freedom and trust”. I love the Winklevosses, who used the metaphor “Bitcoin is software for the hardware of gold” and delighted the crowd by proclaiming that the US dollar is the “biggest shitty coin of them all”. Twitter CEO Jack Dorsey justified this with the fact that the “Internet needs a local currency”.

It is also noteworthy who was Not present: the “suits” and “unbelievers” so to speak. The financial intermediaries, capitalists, and their henchmen who are marginalized or eliminated were the real promise and primary purpose of the blockchain, according to Satoshi Nakamoto. In absenteeism included the traditional commercial and commercial banks, the venture capital and private equity firms, the traditional investment banks and hedge funds, and the companies and professionals such as law firms and accounting firms who helped them catch up – or help them find an opportunity to “own” the blockchain, and thus the consumers and the public, through approved blockchains.

For me, I found that quite refreshing. It felt like the exciting programs I participated in in 2018, at a time when the same absentee players were calling Bitcoin a hoax or a scam and were excited about the price drop this year. While not everyone from 2018 understood what the rules of the way might be to create a mass adoption or the best way to go, there was sincerity, great camaraderie, and a passion for the efforts and speakers – an understanding that it was a great one Part of the world that could benefit economically and politically from this untied financial system that BTC can create. They were the ones who realized that rampant inflation was treacherously and secretly devaluing citizens’ wealth. As Paxos co-founder and CEO Charles Cascarilla said at Bitcoin 2021, Bitcoin is not just a good idea, it’s a legitimate idea for an alternative financial system.

Crypto is legitimate

I am also interested in the lack of discussion today about the legitimacy of cryptocurrencies as an investment, both at the conference and elsewhere. I remember sitting on a panel advocating blockchain and crypto at the time with another panelist, a former Goldman guy, dismissing crypto by saying he would only take stocks or notes for any blockchain investment -Accept startup.

Remember when the infidels and others who prayed for the demise of BTC realized that owning a cryptocurrency was a fool’s game because the coin gives you as an investor no shareholder-like dividend rights, rights to startup or ecosystem profits, or governance rights procured? It’s amazing how that concern has almost disappeared from the talks about crypto, now that it has a market cap of around $ 1.2 trillion and cryptocurrency futures are traded on the Chicago Mercantile Exchange and the parent company of the New York Stock Exchange Intercontinental Exchange there. Perhaps DeFi gets some credit for this, as it allows investors to earn “interest” by borrowing and wagering their coins, and some of the credit also goes to the growing popularity of proof-of-stakes rather than proof-of-stakes. of work.

El Salvador

The show stopper wasn’t Tony Hawk, however, nor the woman who appeared to be yelling at Dorsey from the front row about Twitter’s privacy policy. It was the young President of the Republic of El Salvador, Nayib Bukele, who comes from the most densely populated country in Central America. He appeared on video transmission towards the end of the conference. Since 2001, El Salvador has given up its own fiat currency, the Colón, and introduced the US dollar as its official currency.

At the conference, Bukele announced that the country would introduce Bitcoin as the second domestic fiat currency on par with the US dollar. A few days later the local legislature passed a new law on this. In Miami, he stated that this assumption “will create jobs and help enable financial inclusion for thousands outside the formal economy.” (It is reported that approximately 70% of the adult population in El Salvador do not have a bank account or credit card.)

According to reports, the law not only requires all merchants to accept BTC for goods and services in business transactions, with the exception of companies that lack the technology to do so. It also removes any capital gains tax on exchanging BTC for transactions to add more stability to the digital asset. Eventually, a development bank will be created holding $ 150 million in BTC to give traders the ability to convert BTC to US dollars instantly. Double wow!

Connected: Adoption of the Bitcoin Standard? El Salvador is inscribed in the history books

Today, many countries and communities are experimenting with use cases for blockchain outside of the financial promise, including providing supply chains and capturing real estate transactions. Examples are Sweden, Georgia, the United Arab Emirates – and with the help of the International Monetary Fund, Bolivia, Peru and Argentina. But no country has ever equated computer code-developed assets with the US dollar!

It will be interesting to see how the rest of the sovereign states react to this. I already read of studies by economists who claim that this legislation will collapse El Salvador’s economy. And the IMF is posing. Let’s see which country will do the same next. I assume that there will be many in the next few years so that this dual system can coexist in these countries. It’s something I’ve been predicting since 2018.

This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, and readers should do their own research when making a decision.

Marc Powers is currently Associate Professor at Florida International University College of Law, where he teaches Blockchain, Crypto and Regulatory Considerations and Fintech Law. He recently retired from Am Law 100 law firm, where he built both the national practice team for securities disputes and regulatory enforcement and the hedge fund industry. Marc began his legal career in the SEC’s Enforcement Division. During his 40 years as a lawyer, he has been involved in representations including the Bernie Madoff Ponzi program, a recent presidential pardon, and the insider trading lawsuit against Martha Stewart.

Views expressed are those of the author alone and do not necessarily reflect the views of Cointelegraph or Florida International University College of Law or its affiliates. This article is for general informational purposes and is not intended and should not be construed as legal advice.