El Salvador's Vice President Felix Ulloa speaks during an interview with Reuters in San Salvador, El Salvador, January 31, 2024. REUTERS/Jose Cabezas
San Salvador (Reuters) - Bitcoin will remain legal tender in El Salvador during the second term of President Nayib Bukele, his vice president said on Wednesday.
Days before an election Bukele is expected to handily win thanks to a draconian gang crackdown, Felix Ulloa - temporarily on leave to run for re-election with Bukele - doubled down on the Central American nation's adoption of the cryptocurrency as legal tender.
The declaration comes after the International Monetary Fund (IMF) asked El Salvador to "reconsider" the measure during negotiations for a billion-dollar loan, Ulloa said.
The government has no intention of reversing the decision, Ulloa said, adding that the recent announcement by the U.S. Securities and Exchange Commission (SEC) to allow U.S.-listed exchange-traded funds (ETFs) that track bitcoin only strengthened its resolve.
A decade in the making, ETFs have been judged a game-changer for bitcoin, offering investors exposure to the world's largest cryptocurrency without directly holding tokens. The ETFs also provide a major boost for a crypto industry beset by scandals.
"Not only will it (the law) be maintained," Ulloa said on Wednesday in an interview with Reuters. "At this moment, it enjoys the greatest credibility in the entire world."
If Bukele and his New Ideas party sweep Sunday's election as the vast majority of polls predict, the Salvadoran government will continue with plans to launch bitcoin-backed bonds during the first quarter of 2024, Ulloa said.
He said the construction of Bitcoin City, a tax-free crypto haven proposed by Bukele in the east of the country, and the issuance of passports to investors who contribute the equivalent of $1 million in the cryptocurrency would also go ahead.
In September 2021, El Salvador became the first country in the world to establish bitcoin as legal tender, earning it harsh criticism. One of the strongest critics was the IMF, with which the country is negotiating a loan of $1.3 billion.
Ulloa, a 72-year-old lawyer, said he hopes the obstacles to accessing IMF financing will be overcome, amid an acceleration of public debt.
"The majority of the package has already been agreed upon," he said.
(Reporting by Nelson Renteria; Writing by Sarah Kinosian; Editing by Diego Ore and Tom Hogue)
