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Project discarded? El Salvador evaluated a digital colón before approving the Bitcoin Law

Key facts:

The digital colón would be a Salvadoran stablecoin pegged to the US dollar.

The presidency denies that the plan is still in force, although the leak suggests otherwise.

While they were preparing the project that ended up becoming the Bitcoin Law, in El Salvador the option of creating their own stablecoin was being considered. The idea was to have a digital colón, in reference to the local currency prior to the current dollarization of the Central American country.

During a series of meetings prior to the approval of bitcoin as legal tender in El Salvador, brothers of President Nayib Bukele presented the plan, as revealed by the Salvadoran media El Faro, based on leaked videos of those encounters.

Bukele’s brothers, Ibrajim and Yusef, held those meetings with various foreign entrepreneurs linked to the development of products for the use and trade of bitcoin and other cryptocurrencies. Among them, Jack Mallers, CEO of Strike who participated together with the Salvadoran president in the announcement of the Bitcoin Law, which CriptoNoticias reported weeks ago.

According to the leaked information, the Bukeles appeared before the businessmen as advisers to the Presidency, despite not being formally part of the government. Ernesto Sanabria, press secretary of the Presidency, acknowledged that the Salvadoran president has his brothers among his advisers for various government decisions.

“The President’s brothers do not work in the Government, but it is no secret to anyone that the President listens to them and often consults them for decision-making,” Sanabria was quoted as saying by El Faro.

The plan of the digital colon would be to have a stablecoin of its own, pegged to the value of the US dollar, but that it would be used internally with the purse created by the government. Among other things, this would allow El Salvador to reissue its own money.

For the digital colon, on the other hand, there would be a fund of at least $ 500 million as a reserve to support the currency’s parity with the dollar. The possibility of an incentive for its use among Salvadorans was also raised, offering discounts for payments with said currency for services offered by the State.

Yusef and Ibrajim Bukele, brothers of the President of El Salvador, meeting with Jack Mallers, CEO of Strike. Source: El Faro.

Possible validity of the project

The media speculates on the possibility that this plan remains in place, particularly since in the meetings it seemed like a decision already made. In addition, El Faro claimed to have documents that detail the project, which includes the creation of the currency and a new digital financial system for El Salvador.

However, Sanabria denied the validity of this plan of the Bukele brothers. “The only public policy that has been promoted is that of Bitcoin at par with the dollar, with the dollar as the reference currency. Everything else remained in discarded ideas or simply proposals from third parties, “he alleged.

El Faro argues that in the materials he had access to, there is no evidence that the dollar will be replaced by the new digital currency. However, he mentions that “the Government already has an execution schedule” for the project. On September 7, when the already approved Bitcoin Law enters into force, there would be a proof of concept for the digital colon. Seven days later, there would already be a “minimum viable product,” adds the report.

Other plans mentioned in the leak have already been carried out, beyond the adoption of bitcoin as legal tender. This includes the creation of your own wallet and the bonus to encourage the use of the cryptocurrency.

For the moment, President Bukele has not commented on this information. To date, there has been no public discussion on this issue nor has it been officially raised, as Sanabria argued.

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