20 Jun 2022 · 4 min read

El Salvadoran Government to Back New Token, Bukele Says ‘Don’t Panic’ About Falling Bitcoin Prices

Nayib Bukele. Source: PresidenciaSV / Twitter

 

El Salvador’s government is readying another crypto move – some nine months after it officially adopted bitcoin (BTC) as legal tender.

Per ElSalvador.com, the website of the newspaper El Diario de Hoy, the state is unperturbed by the current “difficult scenario for digital assets,” and has teamed up with a Canadian company called Astro Babies to launch a new coin called the Salvadoran Crypto Initiative (SCI). 

Astro Babies has thus far focused mainly on the trading of non-fungible tokens (NFTs). The report added that Astro Babies had launched a virtual, crypto-powered casino in El Salvador last week in the country.

The co-founders of the said firm, Mark Al Radan and Canadian Wes Karniej, were quoted as stating that the token had already been developed, adding that “smart contracts are already done.” 

The token’s website is also ready to go live, they added, and talks are now ongoing with a number of “ministers” who are “involved” in the project.

One of those ministers is a key President Nayib Bukele ally in all things crypto-related – Mónica Taher, the head of Technological and Economic International Affairs at the Ministry of Commerce and Investment.

The project’s backers, Taher stated, would be the country’s Ministry of Education, the Ministry of Health, the Ministry of Culture, the Ministry of Housing, and the National Sports Institute (INDES).

Mónica Taher, Head of Technological and Economic International Affairs.
Source: a video screenshot, Adopting Bitcoin / YouTube

The parties stated that the coin would be a so-called “reflection token” (aka a rewards token). Typically, these coins reward the token’s holders with a percentage of every transaction. Transactions on the coin’s network are charged with a fee – almost like a form of tax – which is shared and transferred back to coin holders.

The firm, the media outlet reported, “assured that 30% of the profits generated with the purchase and sale of these tokens will go to state funds.” The company was quoted as explaining that it intended to “donate” 30% of its income from the project to the treasuries of the aforementioned ministries and the INDES.

According to Taher, Astro Babies has been in talks with various government organs for several weeks, but still needed to obtain approval from the Ministry of Finance for its SCI token launch. Legislative change may also be needed: politicians will need to green-light the creation of a trust that will officially receive the “SCI commission fees.”

Taher stated that there was no way to know how much the government could hope to raise through the initiative, as “it will depend on how many people acquire SCI tokens.”

She said:

“The funds will be categorized as non-reimbursable cooperation (donations) and will be distributed equally among the five bodies.”

Karniej was quoted as explaining that the token would be “totally decentralized” and that investors would be able to access it through the Astro Babies trading platform.

Al Radan said that the new SCI coin would be backed by wrapped bitcoin (WBTC) – meaning that any profits going to the state coffers would arrive in the form of crypto and not in USD.

The media outlet quoted the Salvadoran economist Luis Membreño as pouring scorn on the project, and stating:

“Now is a bad time to create a Salvadoran token. [It’s a bad time] even to think about it, since the [government] has not even been able to issue its bitcoin bonds due to a lack of appetite in the market.”

Membreño added that the new SCI token “could be designed to work” on the state-run Chivo bitcoin app and wallet, but pointed out that “Salvadorans have lost confidence in the platform” due to the “numerous problems” that have plagued the app “since its inception.”

Meanwhile, Bukele sought to reassure bitcoin investors of all stripes – including perhaps his government and domestic bitcoiners – with a tweet calling for “patience.”

Writing in both Spanish and English, Bukele wrote:

“I see that some people are worried or anxious about the bitcoin market price. My advice: Stop looking at the graph and enjoy life. If you invested in BTC your investment is safe and its value will immensely grow after the bear market. Patience is the key.”

ElSalvador.com also reported that numerous businesses in the nation have taken down “bitcoin accepted here” signs in recent days, with fears accelerating as BTC prices dipped below the USD 20,000 mark over the weekend.

At 8:57 UTC this morning, BTC is trading at USD 20,537, having gone up nearly 10% in the past day. It is down 23.3% in a week. 

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Learn more: 
- El Salvador’s Finance Minister ‘Laughs off’ Claims of USD 40M Bitcoin ‘Losses’
- Bukele Showcases Bitcoin City Plans and ‘Buys the BTC Dip’ Amid Stark Warning

- El Salvador-hosted ‘44-nation Bitcoin Conference’ Not Quite a Nothing Burger
- Critics Say El Salvador Could Default on Conventional Debts Before it Even Issues Bitcoin Bonds

- 2 in 10 People in El Salvador Still Using Government’s Chivo Bitcoin App – Survey
- El Salvador Turns to the US-based AlphaPoint in Bid to Bolster its Chivo Bitcoin App