El Salvador Weekly: Bitcoin Remittances Not Happening; The veterinary clinic works with loans – PYMNTS.com

The government-issued Chivo digital wallet was meant to be a way to encourage Salvadorans to embrace bitcoin after President Nayib Bukele’s government made the cryptocurrency legal tender.

It has never caught on with the public, and the number of merchants accepting bitcoin — which they are legally required to do — is minimal and declining, ElSalvador.com reported on June 20.

“Now I don’t receive bitcoin payments anymore, besides, people don’t even ask about it anymore, the truth is that it’s not profitable,” said Milton Alexander, owner of Foto Flores in Plaza Libertad in San Salvador.

Customers didn’t use it after spending the $30 bitcoin reward they got for opening a Chivo wallet, he added. “People wanted to spend what the government gave them, we received the money and converted it into dollars.”

Mónica Díaz, a clerk at an electronics store in San Salvador’s central business district, said that in 2022, “we’ve had one or two payments a month like this, but hardly anyone uses the Chivo anymore. Wallet”.

Remittances were perhaps the most important use case for the government’s Chivo digital wallet, as transaction fees are much lower than traditional channels.

And yet, the amount of dollars sent to El Salvador through May this year is up nearly $118 million from the same period a year ago, the country’s central bank revealed this week. This amounted to $3.15 billion and represented an increase of 3.9%, media outlet ElSalvador.com reported.

But less than half of that increase — $52 million — came from Chivo deals. The central bank did not specify how much of this was sent in bitcoin and how much in dollars.

However, this represented 1.65% of total remittances sent. And given that the digital wallet has not added new members to the Salvadoran labor pool in the United States, it seems very unlikely that it has added to the economy other than through fees. much lower transaction rate.

A Salvadoran crypto?

Diario El Salvador and ElSalvador.com reported last week that the Bukele administration plans to launch a national cryptocurrency. Kind of.

While Mónica Taher, director of technological and economic affairs of the administration, declared that the profits of the Salvadoran Crypto Initiative (SCI) token will go to five public institutions: the Ministry of Education, the Ministry of Health, the Ministry of Culture, the Ministry of Housing and National Sports. Institute.

Digging in, it’s issued by “a Canadian company called Astro Babies, which opened a virtual casino last week in the country,” ElSalvador.com said. Which translates to: they promise to give the government 30% of the profits. The “national cryptocurrency” part came from the developers, the article adds.

Dog’s hair

The country is no closer to building the Blockchain City that President Bukele promised to erect on a volcano, by harnessing geothermal energy. Nor is he any closer to launching the billion-dollar “volcanic bonds” to pay him.

But he opened the first thing the president promised to do with the country’s bitcoin profits – investment is down about 70% at this point due to the crypto price crash – the clinic Chivo Pets veterinarian.

However, a finance ministry report said it was actually funded by loans the government took out before launching the Chivo wallet, according to La Prensa Grafica. Which contradicts what the administration has said, she added.

Finance Minister Jose Alejandro Zelaya said on a morning news show that to “create Chivo Pets and get the $4 million in profits, we had to sell coins, otherwise where would the cash flows come from? cash?” Said La Prensa Grafica.

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