El Salvador’s focus on Bitcoin makes it a natural destination for a citizenship by investment (CBI) program, attracting more sovereign individuals.
This is an opinion editorial by Katie The Russian, CEO of Plan B Passport.
Almost two years have passed since the announcement that El Salvador would make bitcoin legal tender. Since then, the government of El Salvador, led by President Nayib Bukele, has taken many more steps to attract capital to the country, offering favorable tax policies, streamlining trade regulations and generally develop a more positive reputation.
But can El Salvador go even further and launch a citizenship by investment (CBI) program?
For those who don’t know, a CBI program allows capitalism to be applied to a government service. In this case, people can donate or invest money in the nation’s economy and, in return, receive a passport to that nation.
The risks of running CBI programs
El Salvador definitely has the legal authority to operate a CBI program, however launching one can potentially open up a can of worms that you would have to deal with. While leading the way in the Bitcoin revolution has earned him the respect of Bitcoiners, some groups, such as the International Monetary Fund (IMF) and the World Bank, view Bitcoin adoption in El Salvador as a threat and have publicly expressed their concerns. The same could be true for a CBI show.
The El Salvador passport is already powerful, providing visa-free or visa-on-arrival access to about 150 countries, including the EU, the UK, all of Latin America and most of Eastern Europe. However, all of these relationships could be at risk if a CBI program causes concerns within countries that have treaties with El Salvador.
Pressure from political allies has prompted previously popular investment migration options, such as those from Cyprus, malt and Portugal, to rethink their offers. As a result, these countries missed out on unique opportunities to pioneer and create fully integrated and customer-focused instruments.
What a CBI program could mean for El Salvador
Now, El Salvador has the opportunity to completely disrupt the CBI market.
If done right, the country could become the preferred choice among wealthy immigrants who see themselves as sovereign individuals. Done right, it also presents the opportunity to take the orange pill to a large number of high net worth individuals around the world.
El Salvador is at the forefront of a new era of relations between citizens and governments, where citizens are treated as customers and governments are treated as service providers. And fortunately for El Salvador, this is not the first time a CBI program has been carried out. For example, some Caribbean islands that lead the CBI industry provide revealing data.
Based on some publicly available information to which I have accessed and my personal experience in the industry, the combined revenue from the Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, and St. Lucia CBI programs contributed about $2.5 billion to the region. . only in 2022.
It is worth mentioning that the population of all those islands combined is only 10% of the population of el salvador.
A similar CBI income would add more than 7% to El Salvador’s GDP.
But would there be a demand for such a program, coming from a Latin American country?
At Plan B Passport, we have seen a large number of requests about this specific jurisdiction, which is not a surprise, considering that we specifically cater to Bitcoiners and that there are multiple factors that draw the attention of this community to El Salvador.
Of course, the tax regime and regulatory environments for businesses are a top priority, however, the political stance of a country also plays a huge role in the decision-making process of Bitcoiners.
El Salvador is perfectly positioned against all these factors and its president is boldly taking a stand against the 2030 agenda of the World Economic Forum (WEF) of “you will have nothing and you will be happy.” El Salvador’s geographic location is also increasing the value of your passport. Unlike the Caribbean, it is not an island and allows access by land while allowing access by water.
What should El Salvador’s CBI program be like?
If the program is implemented correctly, El Salvador will win a lot of business over the Caribbean CBI options. Considering the similarities between the power of El Salvador’s passport and the countries where CBI programs currently exist, it would make sense to set a price close to what the market currently offers.
To give you some examples:
- Saint Kitts currently requires a $125,000 gift for a single applicant, or a $200,000 investment for government-approved properties, or a $400,000 investment in any real estate.
- Saint Lucia requires a donation of $100,000 for a single applicant.
And let me clarify: Families applying together do not have to donate that amount for each family member, rather the primary applicant applies with dependents.
As a CBI service provider, we have noticed that there are many obstacles that clients encounter. Resolving them would benefit the CBI of El Salvador in favor of existing CBIs.
Funds Test
Leading the way in the transition from traditional finance to a better monetary system, El Salvador can offer the first CBI program to officially accept self-custodial bitcoin holdings as proof of funds. This can easily be done with a “sign a message” process to confirm BTC ownership done by the applicant, but I have yet to explain this to the Caribbean CBI representatives.
Payment method
El Salvador may also be the first jurisdiction to accept bitcoin directly for investment options in bonds and donations. Currently, CBI applicants have to use traditional financial assets to transfer funds. Some jurisdictions allow intermediaries, however it will cost the applicant a 5% conversion fee.
We conducted a survey among Plan B Passport email subscribers and got some interesting facts about it. Regarding payment methods, our audience indicated the following preferences:
- USDT: 6%
- USD (via bank transfer): 9%
- BTC: 37%
- Anyone: 48%
We also asked what investment options the audience would like to see:
- Real estate investment: 39%
- Volcano Bonus: 42%
- Non-refundable donation: 19%
Additional investment options
Of course, we’ve already heard about volcano bonds, which would be the first bitcoin-denominated bond option to exist. Also, seeing Bukele make moves to incentivize tech companies to be headquartered and incorporated in El Salvador reminds us The “golden visa” of Armenia and this definitely sets the right motivations for investors.
For example, Armenia grants a golden visa to those who establish an IT business with a capitalization of $1,000,000 or establish a venture capital firm with $80,000,000 in assets.
El Salvador could direct capital toward innovation by implementing such options in a CBI program.
A CBI program in the country of Bitcoin
Bitcoin enthusiasts also view CBI programs as ways to return power to the individual. These programs are seen as a form of pure capitalism applied to government services, allowing individuals to choose their “government service provider” based on price and services offered, and to carry their funds with them. With competition between nation states for capital and talent increasing, the mobility of capital and people has the potential to transform the way we think about citizenship and national identity, and CBI programs may be at the forefront. vanguard of this transformation.
Let me remind you that throughout 2021 to 2023, The government of El Salvador continually bought bitcoin and put it on the country’s balance sheet and as of July 2022, it had 2,381 bitcoins. The launch of the CBI program could be another opportunity for the country to acquire more bitcoins.
While a CBI program could be a productive move for El Salvador, it is not without risk. However, with a powerful passport, favorable tax policies, a positive reputation, and the support of Bitcoin enthusiasts, El Salvador is well positioned to attract foreign investment and talent. Done correctly, a CBI program could be the next step in your transformation, returning power to the individual and changing the way we think about citizenship and national identity.
This is a guest post by Katie The Russian. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
