Crypto Chaos: Will Trump Save El Salvador’s Bitcoin Dreams? 🤔💰

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In a delightful twist of fate, crypto enterprises in El Salvador are pinning their hopes on a Donald Trump presidency to ease the banking sector’s frosty reception to their digital endeavors. One can only imagine the jubilation as the world’s largest economy appears to be inching towards a more crypto-friendly embrace. This is quite the departure from the recent past, where stringent policies left many firms gasping for air, desperately trying to cling to traditional banking services like alifebuoy in a stormy sea.

Ah, the traditional US banks! They have largely kept their distance from the digital asset realm, citing a charming lack of regulatory clarity. Meanwhile, crypto companies have been vocal in their accusations of a systematic effort by regulators to suffocate them, a claim that policymakers, in their infinite wisdom, vehemently deny. How quaint!

Even in El Salvador—the illustrious Bitcoin pioneer, which gallantly passed its Bitcoin Law in 2021 and has been steadily accumulating BTC (yes, that’s Bitcoin, not a new dance move)—crypto firms are still lamenting their struggles to access traditional banking services. It seems the hurdles are as high as ever, despite the government’s ostensible pro-crypto stance. Who would have thought?

“The big problem with the crypto world is bank (access),” lamented Eloísa Cardenas, Chief Innovation Officer at Monetae, an El Salvador-based exchange, in a rather candid interview with CryptoMoon.

“In El Salvador, there is a law, right? You say, ‘Oh, it’s super pro-crypto,’ but the banks won’t open an account for you. I’m telling you, even when you’re fully regulated and based in El Salvador, the local bank won’t give you access out of fear for its relationship with (US) correspondent banks. It’s ridiculous.”

While a few brave exceptions exist, many US banks remain as cautious as a cat in a room full of rocking chairs, wary of regulatory scrutiny and the exorbitant costs of risk management. Yet, the crypto firms are optimistic, believing that the winds of change are blowing favorably as US leaders advocate for clearer regulations and stronger partnerships between traditional finance and the burgeoning digital asset sector. How positively optimistic!

“With Trump’s arrival, it’s expected that operations in the financial system will loosen up a bit,” Cadenas chirped. “It won’t be as restrictive as before.” One can only hope that the loosening does not lead to a free-for-all!

Greater banking acceptance needed in El Salvador

For El Salvador’s crypto ecosystem to flourish, a hearty dose of acceptance from traditional financial institutions is essential, according to Cadenas. In 2021, President Nayib Bukele made headlines by placing a rather audacious bet on Bitcoin, enacting legislation that granted the cryptocurrency legal tender status in the country of six million. Shortly thereafter, the government began purchasing Bitcoin with the fervor of a child in a candy store.

However, widespread adoption among Salvadorans never truly materialized—and the government recently agreed to drop mandatory Bitcoin acceptance as part of negotiations with the International Monetary Fund. Bukele’s grand experiment has indeed ruffled some feathers in the international banking community, straining ties with the IMF. Who knew that a little Bitcoin could cause such a ruckus?

Yet, even the IMF has begrudgingly acknowledged that many of the dreaded risks have not come to pass. While Bukele’s grand Bitcoin vision has been somewhat curtailed, his government’s Treasury purchases have continued unabated—now accounting for roughly 15% of El Salvador’s total national reserves, or nearly $600 million. Quite the financial juggling act!

Are US banks warming up to crypto?

While El Salvador is hailed as one of the most crypto-friendly nations in the world, crypto firms still find themselves grappling with the major roadblock of traditional banking access. However, with Trump’s potential return to the White House as a pro-crypto president—and his appointment of a crypto and AI czar—optimism is bubbling over that the momentum is shifting in the industry’s favor after years of regulatory headwinds. What a time to be alive!

“For the last several years, US bank regulators have unilaterally and undemocratically barred banks from offering crypto services,” lamented Coinbase Chief Policy Officer Faryar Shirzad on the social media platform X.

2025-02-15 00:11