American crypto evangelist Max Keizer compared Salvadoran President Nayib Bukele to John F. Kennedy and El Salvador to the kingdom of Camelot, describing it as a kind of promised land for bitcoin where taxes and central authorities banks are sleighed like dragons. Until a few months ago, Keizer – an American former stockbroker and journalist close to Russian propaganda sites – was just one of many strange characters who began to arrive in the country in 2021 , after Bukele announced that El Salvador was the first in the world to accept bitcoin as legal currency.
Many of the characters – a mix of anarcho-capitalists, cyber-utopians and simple opportunists – left El Salvador as enthusiasm for the bitcoin project began to wane. Only 14% of businesses in the country already use bitcoin, according to official figures. But those characters who are still in the country have become everything — people like Keizer and his wife, Stacy Herbert. Since the end of last year, Keizer and Hebert have been in charge of the country’s National Bitcoin Office. El Salvador, one of the smallest and poorest countries in the region, has a crypto evangelist within the government.
The creation of the National Bitcoin Office, like Bukele’s other crypto projects and much of his government’s management, is shrouded in secrecy. The only figures that have been made public are the $200 million spent on infrastructure to launch the digital currency, such as bitcoin ATMs and a cellphone app. Apart from what Bukele announced on Twitter, it is also not known that many people are investing in bitcoin in the country. Like Bukele, Keizer and Herbet are also active on social media, with more than 700,000 followers. Their YouTube shows and podcasts are the main source of information on bitcoin policies in El Salvador.
Keizer and Herbert both present themselves as a kind of crypto police or crypto judges. They are authorized to investigate possible fraud, and they decide which investors are allowed and which are not. “We did not receive a salary for this. We did this for President Bukele,” Herbert often said, while her husband called their work “a labor of love.” Abandoning their alleged altruism, the couple owns Heisenberg Capital, a fund belonging to Bitfinex, one of the world’s largest platforms for buying and selling bitcoin. And they also own El Zonte Capital, another fund dedicated exclusively to digital investments in El Salvador.
Propaganda and corporate diplomacy
Ricardo Valencia, professor of Political Economy at California State University, argues that for Keizer and Herbert, “the real value of office is not money, but for propaganda and corporate diplomacy.” The National Bitcoin Office is attached to the Presidency of the Republic and has the power to establish international relations. Valencia, who is also a communication specialist, pointed out that “it has the ability to design public policies that are mandatory for other ministries in the country and gave Keizer and Herbert official titles to inaugurate the bitcoin embassies in Europe and the United States.”
Texas and Switzerland have already accepted Salvadoran bitcoin embassies, working in parallel with official diplomatic channels. “A network of apocryphal diplomats was established to serve to spread official and corporate propaganda. It is an exchange of favors within the patrimonial use of the state. In El Salvador, there is no difference between Bukele’s personal deposits and public finances,” Valencia added. Due to the risks associated with bitcoin, such as high volatility and lack of transparency, Bukele’s decision to make the cryptocurrency legal tender has sparked sharp rebuke from the International Monetary Fund (IMF), rating agencies and even the US government.
Bitcoin City
In June 2021, Bukele announced that bitcoin would become the official currency of his country, along with the dollar. He made the announcement during the Bitcoin Conference in Miami, a huge event with concerts, sumo wrestlers, televangelist-style presentations and slogans like “death to the dollar” and “all against the Federal Reserve.” Crypto evangelists criticize the state because they consider it the enemy of what they call “individual sovereignty.” For them, even Elon Musk or Mark Zuckerberg aren’t disruptive enough. They understand social life as a jungle or a casino, where almost the only law is the direct exchange of digital money.
Bukele also shares this messianic tone and flashy exhibitionism. At the end of 2021, Bukele is hosting Bitcoin Week in El Salvador – an event that tries to replicate the vibe of the Miami conference. At the reception to celebrate the end of the event, Bukele went to the main stage, at the foot of the beach, while a giant screen projected in neon blue letters: “The President.” Laser lights, smoke cannons and fireworks went off as the president took the microphone: “When Alexander the Great conquered the world, he decided to build 20 Alexandrias throughout his empire. These cities were beacons of hope for the rest of the planet. We must build our first Alexandria here, in El Salvador. We will build Bitcoin City.”
Bukele said that his Bitcoin City will be powered by geothermal energy from a nearby volcano, and that the money to set up schools, hospitals and other necessary services will come from so-called volcano bonds or bitcoin bonds: bag- Salvadoran public debt securities are backed by bitcoin. A year and a half after the announcement, El Salvador – turning a deaf ear to the IMF’s warnings – is preparing a law that will allow it to raise $1 billion through bitcoin-backed bonds. Keizer and Herbert played an important role in this process. According to the investigation by The Wall Street JournalBitfinex – the parent company of their two funds – will provide not only the technological platform for the bonds, but will also require a license to operate as a trader.
But Keizer and Herbert are not the only influential figures from the crypto world working together to implement the bitcoin transfer in El Salvador. Jack Mallers, a 27-year-old who created an application for instant money transfer through bitcoin, is one of the closest advisers to the president in creating the law that formally introduces the country’s currency. Like Keizer and Herbert, he also has an interest in the bitcoin project in El Salvador: he hopes that his application will gain ground in the country’s remittance market. About 20% of El Salvador’s gross domestic product (GDP) comes from remittances sent by Salvadorians living abroad, mainly to the US. country again.
Only 2% of remittances are transferred via bitcoin, according to data from the Central Bank. And almost 70% of Salvadorans don’t even have a bank account. “Financial inclusion is one of the goals of the bitcoin project. But there is no public policy that promotes these goals,” said economist Tatiana Marroquín. “Other goals are to improve the brand image of the country and the receiving tourists. But with everything that has happened to bitcoin in recent months – the drop in prices, financial fraud – the financial profile of El Salvador has fallen instead of rising.
Bitcoin has lost 40% of its value in the last year. And since Bukele announced that it would be legal, the IMF has issued several warnings. The last warning is in response to the impending release of the so-called volcano bonds. In a statement last month, the international institution stressed: “Given the legal risks, fiscal fragility and largely speculative nature of the crypto markets, the authorities should reconsider their plans to expand the government’s exposure to Bitcoin, including the issuance of tokenized bonds.”
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