The double truth of El Salvador's bitcoins

 

The Theory of Double Truth, erroneously attributed to Averroes and his followers, postulates that two contradictory statements can coexist, one arrived at through reason and the other revealed by faith, both of which are true in their respective spheres.

This false theory, a caricature with which 13th-century scholastic theologians such as Étienne Tempier attacked the Averroists, seems to be resurfacing in contemporary economic thought, specifically in the administration of the self-proclaimed Philosopher King, Nayib Bukele.

According to the International Monetary Fund (IMF), El Salvador is complying with its agreement not to purchase more Bitcoin, as required by the multilateral organization's terms for disbursing a $1.4 billion loan to the country. This was ratified by the president of the Central Reserve Bank of El Salvador, Douglas Rodríguez, and the Minister of Finance, Jerson Posada, in a letter to the IMF reported by CriptoNoticias.

But the National Bitcoin Office continues to publish its respective propaganda pamphlet daily, claiming that "El Salvador bought more Bitcoin," using on-chain data to back it up.

This information can be directly confirmed on blockchain analysis sites such as Arkham, which show daily transfers from the Binance and Bitfinex exchanges, companies that have had close ties to El Salvador, as they would be used for the issuance of the still-awaited Volcano Bonds.

How is it possible, then, for both truths to coexist? Doesn't this break the logical principle of non-contradiction? Can faith in the sacrosanct word of the IMF and Salvadoran officials coexist on the same ontological plane as the truth verifiable by reason through Bitcoin accounting? Yes, because we see a transparent opacity.

Bitcoin's ledger is a source of truth like few others in the contemporary world. In these post-truth times, where it is almost impossible to know whether something is true or created by artificial intelligence, the Bitcoin network, designed with an adversarial and distrustful mindset, where thousands of nodes verify compliance with the rules and where mining power makes it prohibitive to modify the recorded information, is an oasis in a desert of lies.

This is why, in March 2024, when El Salvador revealed this address, we considered it a milestone of transparency and auditability unprecedented in history. Anyone, from anywhere in the world, can know the movements of funds to and from this address, and investigate its nature and the connections with the entities with whom those movements are made. And so it has been.

However, the Bitcoin network, like any cryptocurrency network, is a closed system. It has no way of knowing anything about information outside its network. And that's exactly what happens with transactions from Binance and Bitfinex.

Internal exchange transactions aren't settled on the network until the money is withdrawn; they're only recorded in the exchanges' private ledgers and their users' balance sheets. Since this information isn't public or accessible, we can't know anything about it.

Given this knowledge gap, we only have transparency of on-chain bitcoins. In March 2024, Bukele claimed that the disclosed address represented "a portion" of his BTC. El Salvador could well have hundreds of bitcoins on exchanges, enough to maintain the theater of buying one bitcoin daily from here until they manage to repay the IMF loan and can, in effect, resume their real purchases.

But the National Bitcoin Office is the only one that says El Salvador continues to buy Bitcoin. The Philosopher King, after being so vocal on the subject and assuring that El Salvador would not bow to anyone, has not published anything about Bitcoin since January 30 of this year; he only retweets, without affirming or refuting anything at all, leaving the double truth in a state of suspense.

Logically, the double standard of El Salvador's Bitcoins doesn't hold water. This quantum, Schrödinger-like state, in which El Salvador buys and doesn't buy Bitcoins at the same time, is nothing more than propaganda to continue enchanting Bitcoiners.

After pioneering the adoption of Bitcoin at the nation-state level, opening the door for politicians around the world to gain confidence in implementing similar policies, likely also influencing Donald Trump's decision to promote this industry in the United States, it seems the IMF has managed to put an end to this first phase of Bitcoin in the Salvadoran state.

After eliminating legal tender, discontinuing the Chivo Wallet, liquidating FideBitcoin, and so on, the Bretton Woods creature seems to be managing to defend its role as guarantor of dollar supremacy at the state level. However, this could be a tactic within the strategic vision of Bitcoin in El Salvador.

From a national interest perspective, El Salvador may have momentarily needed the IMF and is choosing to give in to its conditions for reasons of state. However, the fact that it is maintaining this kind of double talk regarding Bitcoin purchases shows that it is not willing to let go of this narrative and that it is in its interest to maintain the favor of Bitcoiners, who recognize the strong potential of this industry.

Until then, Bitcoin in El Salvador continues on the path on which it was born, from the entrepreneurial spirit of its communities, civic centers, circular economies, and educators, now probably with greater momentum because it has shed the ideological burden with which the government's detractors associated Bitcoin.

Bitcoin hasn't needed any government to advance. Within the network, all nodes are equal. And if the government of El Salvador isn't buying BTC, then there's a greater opportunity for Salvadorans to accumulate.

The United States legalized its multiple CBDCs

 

Stablecoins seek to maintain the dollar's global hegemony.

At the same time, they covertly violate foreign monetary sovereignty.

The United States, in the same week, is seeking to ban central bank digital currencies (CBDCs) and regulate stablecoins. What a coincidence, isn't it? Politicians rarely make a move without a thimble, but this time the pattern is blatantly obvious.

The vehemence with which the Trump administration has highlighted the benefits of stablecoins has been resounding. Anyone who watched the nationalized Bitcoin 2025 conference in Las Vegas was left with echolalia aftershocks from the repeated use of the word, already a marketing fallacy (stable and fiat are a logical contradiction; the only real stablecoin is Bitcoin).

These propaganda efforts find their epitome in the GENIUS Act, passed Thursday by the House of Representatives and signed today by the president, whose name seems like self-flattery for the genius of this strategy: to win the praise of Bitcoiners by banning CBDCs, with the Anti-CBDC Act, while introducing them through the back door of stablecoins.

The Anti-CBDC State Surveillance Bill, which is still under discussion in the House of Representatives, establishes:

“The Board of Governors of the Federal Reserve System may not test, study, develop, create, or implement a central bank digital currency, or any substantially similar digital asset under any other name or label.”

HR5403 – State CBDC Anti-Surveillance Act

Later, it goes on to define CBDCs as “a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the Federal Reserve System.” Thus far, the only distinction between a CBDC and a U.S. dollar stablecoin is that the asset is a liability issued directly by one of the various Federal Reserve banks.

But the document also clarifies that this prohibition should not be understood “as prohibiting any dollar-denominated currency that is open, permissionless, and private and that fully preserves the privacy protections of U.S. coins and physical currency,” alluding, of course, to stablecoins.

All of this is a game of definitions; the CBDC system already exists in the United States without creating a new instrument. Why do you need a CBDC when 90% of the dollar supply is already entries in a digital database; when people are arbitrarily excluded from the financial system; and financial surveillance is established under KYC laws? That is, the Bank Secrecy Act of 1970; the Patriot Act of 2001; the Foreign Account Tax Compliance Act (FATCA) of 2010; the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and the Anti-Money Laundering Act of 2020.

In short, an arsenal of laws that forces private financial institutions to become de facto government agencies and report the transactions of their clients and users to the authorities. And guess who's classified as financial institutions under the brilliant GENIUS Act... Bingo!: stablecoin issuers.

This means they must file Cash Transaction Reports (CTRs) and Suspicious Activity Reports (SARs), the same monitoring that traditional banks do. It requires stablecoin issuers to implement Customer Identification Programs (CIPs) and enhanced due diligence (EDD) for high-risk accounts, especially in cross-border transactions. In other words, beyond the transparency and traceability inherent in cryptocurrency network accounting, stablecoin issuers must become direct reporters to the State. GENIUS deepens financial surveillance through stablecoins.

And while the GENIUS Act doesn't explicitly mention FATCA, its focus on the international interoperability of dollar-backed stablecoins means issuers may have to report information about foreign holders to the IRS, especially if they operate in the 113 jurisdictions subject to FATCA agreements.

It's said to prohibit digital currencies issued by and becoming liabilities of the Fed, but by requiring stablecoins to hold their reserves in instruments issued by the Federal Reserve, they not only increase demand for US Treasury assets, but essentially become a proxy for the institution. Already today, Tether alone is the 19th largest holder of US Treasury securities worldwide.

Furthermore, although it doesn't explicitly prohibit them, by excluding reserves in other cryptocurrencies, stablecoins such as USDS (formerly Dai), Ethena's USDe, or Aave's GHO, and, obviously, algorithmic stablecoins, would effectively be excluded from the game.

This entire panorama undermines the lack of decentralization present in stablecoins and turns them into a machine that empowers the dollar and the Federal Reserve. Stablecoin issuers in the United States will have characteristics similar to any bank. Furthermore, it has already been said that this law favors stablecoin issuers being established banks in the traditional system.

With this law, the United States decentralizes the dissemination of its currency, but now it controls it. Before, it was only the Fed and its branches; now it's any private US institution that plays by its rules. But with stablecoins, this positioning goes beyond its borders.

Stablecoins have demonstrated that a CBDC would be redundant for the domestic market, as most payments are already digital. Currently, 98% of the multi-billion-dollar stablecoin market is pegged to the US dollar, and 80% of transactions are made outside the United States. And that is precisely the geopolitical opportunity.

The cryptocurrency market is psychologically and practically dollarized. Not only is the dollar the unit of account against which price fluctuations of all currencies are measured, but traders are turning to dollar-pegged stablecoins for profit-taking and protection against downside.

Many people in inflationary economies, with exchange controls, or with difficult access to the international market, have turned to dollar stablecoins to save, receive remittances, pay suppliers, and enjoy other advantages that this digital system provides over the fiat banking system.

There are currently more than 167 stablecoins pegged to the dollar, while there are only 21 of the euro, the second largest fiat currency. However, despite the fact that there are many stablecoins that could seek licensing under this new regulation, such as Coinbase, Ripple, Binance, the reality at the moment is that the market is controlled by a duopoly between USDT and USDC:

This is the scenario the Trump administration has identified and is leveraging to reverse the de-dollarization process that deepened during Joe Biden's presidency, as expressed by Tether's CEO, Paolo Ardoino. While stablecoins bring benefits to life at the individual level, this law will increase the risks of surveillance and account freezing. And, at the state level, they threaten the monetary sovereignty of other countries.

That is why it is more appropriate to promote stablecoins rather than CBDCs, as they promote the global hegemony of the dollar without the government being directly accused of interference, since private companies issue the instrument instead of the Fed. They will do so candidly, as GENIUS establishes, with the Secretary of the Treasury, a former auditor of Tether's reserves, seeking reciprocal agreements with other countries to facilitate the use of dollar-denominated stablecoins issued abroad, likely with negotiations similar to those for the Petrodollar.

At the same time, the predominance of dollar-denominated stablecoins worldwide, and the importance of the United States as a hub for companies issuing stablecoins, will mean that the standards established in the regulatory framework, such as financial oversight measures, will also end up being exported and influence global digital finance practices, ensuring that dollar-backed stablecoins become the global benchmark.

Finally, stablecoins offer the opportunity to freeze funds remotely. It is already common practice for stablecoin issuers to freeze accounts associated with hacks. But since GENIUS, the enemies multiply, along with the blocking capacity. Until now, the main targets have been individuals classified as criminals (which may include dissidents and political opponents) and sanctioned nations. Now, agencies such as the IRS, NSA, and FinCEN will have access to cryptocurrency user data, which will be analyzed by their artificial intelligence, as has already been revealed with banking transactions. This can be leveraged to censor and exclude enemy actors from the financial system, as happened with the exclusion of Russia in 2021.

As we established in our last editorial, the United States is creating a silent Bretton Woods with stablecoins, seeking to reestablish the international dominance of the dollar, no longer in countries' reserves, but directly in the savings and payments of individuals and businesses. The United States did not ban CBDCs; it rebranded them.