El Salvador’s National Bitcoin Head Fills Argentina with Orange – Cointelegraph Magazine

It takes more than 10 hours to fly from El Salvador to Argentina, but Juan Carlos Reyes’ latest flight may be one of the most important of his life.

It could also have global significance, although Reyes is not currently able to reveal too much about it.

Reyes, who has been appointed president of El Salvador’s newly created National Commission for Digital Assets (CNAD), has just returned from Buenos Aires from a high-level meeting with Argentina’s securities regulator, the National Securities Commission.

In an exclusive interview with Magazine, he was in good spirits, albeit diplomatically, as he talked about potential cooperation between the two Bitcoin-friendly countries.

“El Salvador’s multinational projects are determined by the president. However, both countries are talking about exciting opportunities and projects for the future. “There is a lot of common interest between our institutions and national leaders, so I would say stay tuned,” he says.

Let’s not forget that before El Salvador adopted Bitcoin as a legal tender in September 2021, it was Argentina that was most accepting and interested in Bitcoin, especially due to Argentina’s inflation rate.

According to Statista, the peso inflation rate in 2024 will reach a whopping 250%, continuing an upward trend every year for the past seven years from 25% in 2017.

In October 2011, under President Cristina Fernández de Kirchner, Argentina introduced strict currency controls, making it very difficult for citizens to obtain US dollars, a hedge against Argentine peso inflation.

As a result, alternatives like Bitcoin were naturally attractive to Argentines who no longer had an easy option to acquire dollars and wanted to protect their savings.

Interest in Bitcoin is likely to increase further following the December 2023 election victory of maverick Javier Millais, who has advocated radical measures to clean up the country’s economy.

Reyes’ visit to Argentina was probably a result of Milei’s election victory and a meeting with Argentina’s National Securities Commission.

Argentina appeared to be the most likely candidate for Bitcoinization, but El Salvador took the bull by the horns in September 2021, embracing Bitcoin by passing its famous Bitcoin law.

Reyes took the orange pill in 2013.

For CNAD Chairman Reyes, who discovered Bitcoin in 2013, this was a mission he had been entrusted with since he was young.

“I have been passionate about computers since I first touched one at the age of five. I learned basic programming before the age of 10 and have been working on open source projects since the 1990s.”

“When I learned about Bitcoin, I immediately fell in love with the technology and could see the potential it had. I watched its adoption closely and preached its transformative power to anyone who would listen.”

“Starting in 2018, I started getting serious about technology and applying it to my professional life,” he says.

El Salvador has not historically been known for its progressive approach. When Reyes’ parents immigrated to Canada in 1990, the country had been going through three decades of internal and external war.

Worldwide, an estimated 2.6 million Salvadorans are in the diaspora, a staggering number for a country of 6.4 million people. But the country’s changing fortunes have brought Reyes and many others back.

“I was very young when I left El Salvador. The opportunity to come back and be part of the vision that the President has set out is a once-in-a-lifetime opportunity to help build the country I was born in.”

“I grew up in Canada, where the culture is more tolerant of diversity, so it was quite easy for me to keep my Salvadoran customs. “Most of my family is very religious, so praying, going to church and eating pupusas were always a big part of how I grew up.”

For those who don’t know much about Salvadoran food, pupusas are griddle cakes or flatbreads made from cornmeal. It is the national dish of El Salvador, best eaten with cheese.

Reyes continues to talk about his journey into cryptocurrency.

“I studied mining engineering and have degrees in physics, mathematics and computer science. Later, as part of my challenge, I earned a master’s degree from Harvard and then started my own company and consultancy for government and private industry before returning to my home country and helping my compatriots in this new initiative,” he says.

Bitcoin Laws in El Salvador: The Good and the Bad

El Salvador’s embrace of Bitcoin has had significant benefits. About 6,000 Bitcoin stacks in the South American country have benefited from the surge in Bitcoin prices, leading to a surge in “crypto tourists” coming to El Salvador to see it for themselves.

However, the journey has not been smooth sailing, with international organizations fighting back after El Salvador decided to recognize Bitcoin as legal tender.

In early 2024, Reuters reported that the International Monetary Fund (IMF) recommended removing Bitcoin’s legal tender status during financial aid negotiations, citing transparency and economic concerns.

The country’s citizens themselves have been slow to adopt Bitcoin. According to a recent survey by the Bank of El Salvador, 88% of Salvadorans will not use Bitcoin in 2023 and cryptocurrency payments have also declined, with only 1% of remittances made in cryptocurrency last year compared to 1.7% in 2022.

There were other difficulties as well. Chivo, the state-owned Bitcoin wallet, has been hacked several times, with one hack exposing the personal data of approximately 5.1 million Salvadoran citizens.

Reyes acknowledges that the task of making El Salvador the world’s real-world asset tokenization capital will not be easy. Pioneers always get arrows in their backs.

“(The) CNAD will not exist until 2023, and I have been in that position for a little over six months. “We are pioneers in regulating digital assets and opening up untouched financial markets as we become a globally recognized digital asset hub.”

What is the CNAD of El Salvador?

CNAD is a government agency established in 2023 that oversees digital asset environmental regulation in El Salvador.

It is a decentralized, autonomous entity with distinct legal status and independence and operates as an independent entity.

“(The) CNAD is a single point of entry for financial digital assets. Any company that trades anything other than pure Bitcoin for fiat will need permission from the Commission. “Currently, we are the only country in the world with an independent regulatory body on this issue,” he says.

Reyes said the first milestone is creating an appropriate and fair regulatory framework that balances international compliance standards with strong anti-money laundering requirements. Other challenges followed.

“The second challenge was to build the CNAD team. We sought out the best, youngest and most experienced professionals in the industry, and in a short period of time we created a dream team of 24 people, most of whom were under 40.”

Collectively, this “dream team” has more than 150 years of financial management experience and 70 years of direct banking regulatory and supervisory experience, according to Reyes.

Reyes continued:

“The third challenge was creating a healthy and strong ecosystem with digital asset service providers (DASPs). This was not an easy task. By May 2024, CNAD had received, reviewed and analyzed close to 100 applications. I did.”

“Many companies are still going through the regulatory process, and we are working back and forth with our team to ensure compliance with our regulatory requirements. However, approximately a quarter of all applicants have been approved and are already doing business in El Salvador and around the world. “ says Reyes.

El Salvador provided its first licenses three months after passing its 2023 Digital Asset Issuance Act. To become a DASP, applicants must be screened and confirmed by CNAD to operate in El Salvador.

Bitfinex Securities El Salvador, a newly formed entity affiliated with cryptocurrency exchange Bitfinex, has emerged as the first licensed DASP in El Salvador.

The licensing took place on April 11, 2023, exactly three months after El Salvador passed the Digital Asset Issuance Law on January 11, 2023.

In El Salvador, everyone knows about Bitcoin.

Reyes acknowledges that there are “many challenges and technical learning curves” with every new project, but points to positive trends in the economy and education.

“Everyone in our country has heard of Bitcoin or knows about digital finance, which is something no other country in the world can say. We are also seeing a growing number of investors interested in relocating their businesses to El Salvador, as well as foreigners and wealthy Salvadorans who miss their homeland and seek a better quality of life.”

“El Salvadorans can pay off their debt at the bank with Bitcoin, every Salvadorian can use and receive Bitcoin with a government wallet, and they can choose to hold only $1,” he said, encouraging traditional financial institutions to embrace Bitcoin and adopt it. He added that there is an opportunity to merge. Balance it out if you want.”

He concluded that El Salvador is not only the most pro-Bitcoin country in the world, but is also gathering data and experience that will help other countries catch up.

“Yes, there are difficulties. But through our journey we have learned many lessons that we will share with other countries and actively share our expertise (…). We are very excited to do so.”

Time will tell whether such advice was included in Reyes’ remarks on his recent visit to Argentina, and whether Argentina’s new president will follow El Salvador’s lead. But the whole world will be watching. These are very exciting times.

subscribe

The most interesting read on blockchain. Delivered once a week.

Monty Munford

Monty Munford writes regularly for the BBC, The Economist and City AM, and is a technology columnist for Forbes and The Telegraph. He also runs a growth and visibility consulting firm and has appeared at more than 200 events and conferences, interviewing figures including Tim Draper, the late John McAfee, Sir Tim Berners-Lee, Steve Wozniak, Kim Kardashian and Guns N’ Roses. .

Follow the author @MontyMonford