El Salvador recently made worldwide headlines after the Central American nation became the first in the world to classify bitcoin (BTC) as legal tender.
The move, taken at the behest of President Nayib Bukele and approved by the country’s parliament, sent shockwaves across the world and forced several other countries to explore the option of embracing digital currencies to get out of the monopolized dollar standard.
In this article, we look at possible contender countries that can follow El Salvador’s move in crypto adoption. While not necessarily making bitcoin legal tender, these countries could make cryptocurrencies an integral part of their economy to decouple with the greenback and eventually cement themselves as self-sufficient economies.
This South American country has been battling economic woes since the late 20th century.
According to a World Bank summary, the COVID-19 pandemic was particularly unforgiving to Paraguay as it was just embarking on a recovery path after having its economic growth stalled for the better part of the last decade.
Recession and unemployment are running rampant in Paraguay and the risk of hyperinflation on the back of depressing macro-economic conditions cannot be overstated.
With the aforementioned in consideration, Paraguay could pivot to embracing bitcoin (BTC) and other cryptocurrencies to repair its broken economic infrastructure.
Notably, on July 10, Paraguayan lawmaker Carlito Rejala announced he was working with Senator Fernando Silva Facetti to introduce a bitcoin legislation bill in the parliament. While the finer details of the bill are yet to come to light, it is a promising start for Paraguay, nonetheless.
Another Central American country akin to El Salvador, Panama has, for a long time, served as a tax haven for several transnational companies across the world.
Panama adopted the U.S. dollar in 1904 after it entered into a monetary agreement with the U.S. Since then, the greenback has dominated Panama’s economy despite it having a local fiat currency called the Balboa.
In July, Panamanian congressman Gabriel Silva is slated to introduce a crypto regulation bill, which, in his words, draws inspiration from the one introduced in El Salvador that made BTC legal tender.
Silva tweeted that he finds El Salvador’s project “positive, ambitious, interesting and with good acceptance.”
Similar to the Paraguayan bitcoin legislation bill, the intricacies of this bill are not known yet. However, Silva added that in addition to making bitcoin legal tender in Panama, the bill will also seek to create tax incentives for crypto-related businesses and ventures in the country.
It is yet to be seen how much support Silva’s ambitious crypto bill is able to garner from the Panamanian parliament as unlike El Salvador, where President Bukele enjoys a clear majority in the parliament, Silva’s party called Bancada Independiente sits in the opposition. Silva, however, assured that his party has a good understanding of the ruling government and the two have worked together in the past on critical legislation.
Turkey might stand as the odd-one-out in this list of countries where, for the lack of a better word, there are favourable crypto regulations. However, the reality is more than what meets the eye.
To everyone’s surprise, Turkey is, in fact, one of the countries with the highest crypto ownership in the world.
A survey conducted in 2019 by Statista found that a staggering 20% of the Turkish population uses cryptocurrencies. With the added impetus of the COVID-19 pandemic and the falling Turkish lira, this figure can only be orders of magnitude higher today.
The boom of cryptocurrencies in Turkey despite the country’s anti-crypto stance and the recent unfortunate event of some major Turkish crypto exchanges going shut speaks volumes about the rate of crypto adoption in the country.
Specifically, the rampant inflation in Turkey has rendered the local fiat currency – the Turkish lira – thoroughly weak.
The purchasing power of the lira has crashed a staggering 16% percent since March 2021 after Turkey’s president, Recep Tayyip Erdogan instructed the Turkish central bank to cut down on interest rates.
To add fuel to the fire, Erdogan fired the Governor of the Turkish Central Bank in May this year, leading to the ousting of 4 Central Bank Governors in a mere time period of two months.
With such dire and uncertain monetary infrastructure in place across countries, people in troubled economies are steadily inching closer to adopting bitcoin (BTC) as a hedge against inflation and totalitarian surveillance regimes – something that gold bugs wish the shiny metal could offer.