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The state of Bitcoin adoption in El Salvador

Following the recognition of bitcoin as legal tender, El Salvador has been caught in a PR battle between country’s crypto-friendly president Nayib Bukele and international financial organizations.

The country quickly became the famous destination for Bitcoiners around the world, which revived the tourism sector that has been devastated by COVID-related restrictions. Since bitcoin is legal tender, tax residents of El Salvador can benefit from capital gains tax exemptions.

The latest initiative is set to raise $1 billion to build the volcano-powered “Bitcoin City” with flat zero income tax, capital gains tax, and other taxes, except for value-added tax (VAT), which will be used to pay for city maintenance and municipality’s bonds. The necessary funds are planned to be raised in partnership with Bitfinex and Blockstream through issuing so-called ‘Bitcoin Bond’ on the Liquid Network, a less decentralized Bitcoin scaling solution developed by Blockstream. Half of the raised capital will be used to buy BTC, and the remainder will be allocated for infrastructure spendings.

Following the announcement of Bitcoin City, the International Monetary Fund (IMF) has warned El Salvador against using bitcoin as legal tender due to its high price volatility, which poses a threat to financial stability.

While the crypto community cheered new developments, critics called the initiative “an absurd political stunt by a delusional dictator” and pointed out that locals still experience technical issues with government bitcoin wallet Chivo.

Speaking at the Cambridge University students union, Governor of the UK’s central bank Andrew Bailey expressed his concerns that many citizens of El Salvador still don’t understand the nature and volatility of Bitcoin. This wasn’t the first time Bailey criticized cryptocurrencies, but this time he got a somewhat ironic response from Bukele, who questioned whether Bailey’s concerns about the well-being of Salvadorans were “genuine”.

El Salvador’s ambassador to the US, Milena Mayorga, told to CoinDesk that the country is ready to burn bridges with international organizations if they will become an obstacle to Bitcoin adoption. According to the official, the US is concerned about losing the power of the dollar, and traditional international financial organizations are afraid that other countries will go for an alternative funding option if El Salvador’s “Bitcoin Bond” will succeed.


Major NFT marketplaces censor a conservative political cartoonist

The Flurks NFT collection created by pseudonymous right-leaning cartoonist StoneToss has been removed from two major NFT platforms: OpenSea and Rarible. The former doesn’t have a governance token, so all decisions are expected to be made internally by the company.

Rarible, on the other hand, has RARI as its governance token, but the decision to censor the controversial collection was made without any governance vote on the matter.

This collection consists of 5,000 NFTs connected to artist’s work, which were sold out in 22 minutes for approximately $1.8 million. StoneToss sees the removal of his art from NFTs platforms as political censorship.

It’s worth noting that even though the NFT ownership is recorded on the censorship-resistant Ethereum blockchain, marketplaces can choose what to list on their websites.

In other news

  • Popular US-based crypto exchange Kraken delisted privacy-focused cryptocurrency Monero (XMR) for UK customers in compliance with country’s regulations. Similarly, brokerage exchange eToro limited trading of Cardano (ADA) and Tron (TRX) for its US customers due to regulatory concerns.

  • 69-year old Israeli pensioner Esther Freeman invested around $3,000 in Bitcoin in 2013, turning it into more than $320,000 in eight years. However, one of the largest banks in the country, the Hapoalim Bank refused to deposit the funds transferred from a cryptocurrency exchange platform, because the initial deposit was made by Freeman in cash, so the source of funds cannot be verified.

  • Publicly traded American software intelligence firm MicroStrategy disclosed in a filing with the US SEC that it has added 7,002 more bitcoin to its holding for approximately $414 million. The company now holds more than 121,000 bitcoin worth around $7 billion at the moment of writing.

  • DeFi platform MonoX has been exploited to the tune of $31 million worth of varies cryptocurrencies. The funds were stolen from the Ethereum network and its scaling solution Polygon.

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