From digital currency to national identity; El Salvador extends citizenship to global bitcoin investors

El Salvador's Congress has approved a migration law granting expedited citizenship to foreigners who make bitcoin "donations" to government social and economic development programmes.

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FILE PHOTO: Congress members from the ruling Nuevas Ideas party celebrate as they approve El Salvador's President Nayib Bukele's license to leave office and dedicate himself to the 2024 re-election campaign during a special session in San Salvador, El Salvador November 30, 2023. REUTERS/Jose Cabezas/File Photo

In a surprise vote late Wednesday evening, the unicameral legislature passed the reform with support from President Nayib Bukele’s New Ideas party, which controls Congress. The law is expected to come into force in the coming days.

Bukele is running for re-election in the Central American nation’s election, scheduled for Feb. 4.

The reform cites the “vital interest” of the president’s development projects, highlighting “altruistic foreigners interested in supporting the economic, social and cultural development of El Salvador … by donating bitcoin.”

The law does not cite any minimum “donation” requirement. Bitcoin on Thursday was trading at $43,741.

The reform provides that those who qualify would skip the normal requirement for the naturalization process of five years of permanent residence for anyone from a non-Spanish-speaking country, or two if the person has a Salvadoran spouse.

El Salvador made bitcoin a national currency in 2021, although its implementation has been slow and its use limited.

Some foreign promoters of the digital currency have moved to the country, mainly to beach communities.

Bukele’s cash-strapped government is currently working to reach an agreement with the International Monetary Fund for a new financing programme amid concerns over the country’s slow economic growth.

The IMF has been vocal about what it sees as risks stemming from El Salvador’s adoption of bitcoin as legal tender.

Bukele is running for re-election despite the constitution’s appearing to clearly prohibit consecutive terms.

In 2021, El Salvador’s top court – whose members are appointed by Congress – ruled that Bukele could stand for re-election, a decision that drew international condemnation, including from the United States.

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