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Ecuadoran Presidential Candidate Wants to Create a National Cryptocurrency

Fiat & Digital Currency

Ecuadoran presidential candidate Giovanny Andrade shared his plans to create a national cryptocurrency for the Latin American country based on the gold standard. Giovanny Andrade is the president of the Ecuadorian-Chilean Chamber of Mining and has been a supporter of the dollarization of the Ecuadorian economy started in the year 2000 under the presidency of […]

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Ecuadoran presidential candidate Giovanny Andrade shared his plans to create a national cryptocurrency for the Latin American country based on the gold standard.

Giovanny Andrade is the president of the Ecuadorian-Chilean Chamber of Mining and has been a supporter of the dollarization of the Ecuadorian economy started in the year 2000 under the presidency of Jamil Mahuad.

This proposal would take advantage of growing support for cryptocurrencies both in Latin America and Globally.

Supporting Dollarization with Cryptocurrency

According to the candidate, the creation of a national cryptocurrency backed by the gold standard would further develop and support the dollarization scheme instituted by the government by facilitating transactions within the country.

In an interview with the local newspaper “Primicias”, Mr. Andrade stated:

“We are looking at ways to create an Ecuadorian cryptocurrency. This does not mean that we are going to get out from the dollarization process, we must support dollarization. But it is very important that we create a cryptocurrency for all the internal benefits of the country, such as internal transactions. This would work very well.”

Ever since 2000, dollarization has been a controversial decision in the country with many politicians proposing the de-dollarization of the national economy through different mechanisms.

While the 2021 elections have some candidates opposing to it, the criticism toward the process has been declining as time passes, with 85% of Ecuadorians considering it positive by 2015.

A Possible Shift in Attitude

Ecuador has not established a legal framework for cryptocurrency and has displayed a negative attitude toward them in the past when it banned them. While this ban has already been lifted, the central bank has stated that Bitcoin is not an authorized payment in the country.

When asked how would the national bank back the price of the national cryptocurrency, Mr. Andrade said a national gold refinery would be created to institute a national gold reserve, which would the used as the principal foundation for the cryptocurrency.

This would be an approach similar to Venezuela’s national cryptocurrency “Petro” which was backed by the country’s oil reserves. The Venezuelan government also announced the launch of “Petro Gold” in 2018 which would work in the same way but pegged to Gold’s price.

While Giovanny Andrade is not one of the frontrunners in the presidential race according to polls, his proposal reflects a shift that has started taking place in the country toward cryptocurrencies, which is also been taking place in the rest of the continent.

Cryptocurrency’s Growing Popularity in Latin America

Latin America has been a continent historically influenced by global powers when it comes to their economies and political policies, with countries like Russia, China, and the United States sparring for getting the most allies in the region.

This “war” for influence, as well as other internal factors like corruption, has caused some Latin American countries like Argentina, Venezuela, and Bolivia to suffer from periods of high inflation and economical turmoil.

This high inflation has forced citizens of multiple countries to use the US dollar as a means of saving money, as doing so in their national currency would result in losses from the depreciation it would incur.

This results in scarcity and the imposition of restrictions on the buying/selling of foreign currency.

Cryptocurrencies offer a way for people to go around these restrictions, allowing them to access international markets to save and invest their earnings, as well as receive the international funds in the case of ONGs or family assistance.

It is estimated that the Latin American market represented around 9% of the total global market in 2019, a number that is highly likely to keep growing in the coming years.

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Source: https://blockonomi.com/ecuador-national-cryptocurrency/

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[Featured Content] The cryptocurrency industry is booming throughout the past year, and the increase in the total market capitalization is definitive proof. The market is, at the time of this writing, valued at about $1.5 trillion. The same can be said about the DeFi industry. The total value locked in various protocols exceeds $39 billion, […] Checkout PrimeXBT
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‘Bitcoin Senator’ Lummis Optimistic About Crypto Tax Reform

Sen. Cynthia Lummis, the first in the Chamber to own Bitcoin, says bipartisan support will accelerate crypto tax reform.

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Sen. Cynthia Lummis (R-Wy) expressed hope on Wednesday that Congress will be able to reform the tax rules governing cryptocurrency, which have been a longtime bugbear for Bitcoin owners and the burgeoning crypto industry.

“We’re optimistic we can find bipartisan agreement on that issue,” said Lummis during a meeting with crypto executives and policy makers on the social media app Clubhouse.

The comment from Lummis, who has owned Bitcoin since 2013, came in response to a question about whether Congress will pass a proposed law calling for a “de minimis” tax exemption for small cryptocurrency transactions.

Currently, IRS guidance stipulates that any minor crypto transaction—such as sending $5 worth of Bitcoin to a friend or using it to buy a cup of coffee—can amount to a capital gains event. Critics say this rule creates needless tax headaches, and discourages innovation by limiting the use of crypto in day-to-day transactions.

And while the IRS has become preoccupied with collecting tax on crypto—a question about virtual currency is now at the top of filers’ income tax return—the agency has done little to simplify the process for reporting it.

Lummis’s interest could help accelerate the passage of crypto tax reform, which has been proposed in bills before the House of Representatives, but never in the Senate. Lummis, whose home state of Wyoming has branded itself as a crypto hub, also pointed to a new Financial Innovation Caucus she is leading with Sen. Kyrsten Sinema (D-Az) as evidence of bipartisan interest in the issue.

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Policy researchers on the Clubhouse call cautioned, however, that passage of crypto legislation is unlikely to occur in the near future. The Biden Administration and Congress is currently wrangling over weighty issues related to the pandemic and economic stimulus, so crypto taxation—a relatively boutique issue—is unlikely to be a high priority.

More broadly, members of the call noted that lawmakers are becoming more knowledgable about cryptocurrency, and not only at the federal level.

Nathan McCauley, the CEO of crypto storage service Anchorage, said that his company has been speaking with several state governments about adding crypto to their corporate treasuries—a move that would mirror what big private sector companies like Tesla and Square have done in recent months.

McCauley suggested the states’ interest in crypto is related to a search for alternate finance and investing options at a time when bond markets are in a prolonged slump.

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Source: https://decrypt.co/60059/bitcoin-senator-lummis-crypto-tax-reform

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