El Salvador’s president boasts about buying Bitcoin for the country on his phone.
He has offered few details about where he’s buying it, or how the country’s Bitcoin is being secured.
El Salvador made history last fall by becoming the first country to accept Bitcoin as legal tender. Since then, the country’s ballcap-wearing president, Nayeb Bukele, has boasted of buying more than 1,000 BTC for El Salvador’s treasury—and doing it all on his phone.
Bukele’s big Bitcoinexperiment can be seen as innovative, reckless, or both–it’s too soon to say for sure. But a broader lack of transparency surrounding the country’s accounting and cybersecurity practices may give both Salvadorans and foreign investors cause for alarm.
Putting Bitcoin on the government’s books
Since no other government recognizes Bitcoin as legal tender, El Salvador is in novel territory when it comes to managing the digital currency. But there are best practices that governments can employ when it comes to storing and reporting on the nation’s finances.
The United States Federal Reserve, for instance, documents the reserve assets it holds every month. Those records cover not just foreign currencies but also physical assets like gold.
The Fed’s records disclose where these assets are held—as well as the assets it holds that do not technically belong to it. For example, under “gold stock,” the Fed notes that gold held “under earmark” at Federal Reserve banks for “foreign and international accounts” is not included in its monthly tallies.