In recent weeks, the government of El Salvador has sought to attract investment by offering residency and citizenship perks in exchange for Bitcoin. Hoping to draw wealthy Bitcoiners with a new “Freedom Visa,” earlier this month the government offered permanent residency to those who invest $1M worth of BTC in the country.
Taking the logic of the Freedom Visa one step further, on Thursday, December 21, El Salvador’s Congress approved a new migration law granting expedited citizenship to foreigners who contribute Bitcoin to the government’s social and economic development programs.
Under normal circumstances, most migrants need to reside permanently in El Salvador for at least 5 years before they are eligible for citizenship, or 2 years if they are married to an existing citizen.
Without citing a minimum donation threshold, the latest reform shortens that period for “altruistic foreigners interested in supporting the economic, social and cultural development of El Salvador … by donating Bitcoin.” The previously announced Freedom visa program is open to anyone who invests $1 million worth of crypto.
The migration law is the latest in a string of pro-Bitcoin policies implemented under the Presidency of Nayib Bukele.
Since passing legislation to make Bitcoin legal tender in 2021, Bukele’s government has incorporated the cryptocurrency into its economic vision for El Salvador. Policies include using public funds to invest in BTC, building a billion-dollar Bitcoin mining operation, and ambitious plans for “Bitcoin City,” which the government intends to finance using so-called “volcano bonds.”
While the emphasis on Bitcoin makes El Salvador’s latest efforts to attract foreign investment novel, they don’t necessarily offer good value for money.
For just $40,000–$80,000, neighboring Panama offers a much cheaper route to permanent residency via its Reforestation Visa Program . Meanwhile, $100,000 buys full citizenship in Caribbean nations such as Antigua and Barbuda or St Lucia . And while advocates for each country will no doubt contest that their beaches are superior, for the international passport shopper, island life can offer considerable tax advantages.
Given the alternatives on offer elsewhere, El Salvador might struggle to attract crypto millionaires. But the government appears to be banking on the appeal of the “Bitcoin lifestyle” to give it the edge.
Promotional materials present El Salvador’s Freedom Visa as an opportunity to make a home in the “land of economic liberty.”
However, given the authoritarian slant of Bukele’s rule, his vision for the country appears to share more with Javier Millei’s anarcho-capitalism than the more traditionally pro-business stance of Latin American countries like Chile or Costa Rica.
Based on what little information is available, Bukele’s government envisages Bitcoin City as some kind of laissez-faire paradise where businesses can set up shop without having to worry about pesky regulators.
The project is arguably crypto’s version of Honduras’ “Zones for Employment and Economic Development” (ZEDE): an experiment in establishing semi-autonomous economic zones by ceding sovereignty to foreign investors.
A decade after introducing the concept, the Honduran government repealed the ZEDE legislation in 2022, leaving enclaves like the city of Próspera in limbo. In the end, the initiative succumbed to accusations of neocolonialism and fierce resistance from the country’s judiciary and the various ZEDE’s neighbors.
Finally, considering the rising global focus on crypto regulation, there is good reason to question whether businesses really want regulatory havens.
For the world’s largest crypto firms – including Coinbase – Bermuda’s middle-of-the-road approach appears to be much more compelling. Offering the benefits of a more permissive regulatory framework, the Bermudan approach stops short of cutting so much red tape that it makes doing business elsewhere impossible.