El Salvador proposes crypto payments in trade with Russia

El Salvador reportedly offered Russia a proposal to use digital currencies as a medium of trade between the two countries. The pro-Bitcoin country is also considering applying for a BRICS membership to pursue further economic development.

The Latin American country reportedly submitted a proposal to Russia for the incorporation of Bitcoin as a medium of trade between the two countries. Alexander Ilyukhin, the head of the Russian office in El Salvador and the first secretary of the Russian embassy in Nicaragua, confirmed El Salvador’s proposal in an interview with a local news outlet. 

El Salvador’s official currency hinders trade with Russia

Ilyukhin stated that Latin American countries use the US dollar as their official currency, which is currently under sanctions in Russia. 

“We have difficulties with calculations because the official currency in El Salvador is the US dollar. As an alternative, El Salvador offers to use cryptocurrency in trade operations.”

–Ilyukhin

The diplomat also told the outlet that the South American nation’s proposal would be difficult to implement since Bitcoin is not as widely used in Russia as it is in Latin America. Ilyukhin emphasized that the two countries were still hunting for other means to enhance trade since both nations wanted to continue with their economic coalition.

One option that Russia and El Salvador have considered is setting up a bank in the latter country that could support transactions in different currencies, such as the Indian rupee, the Russian ruble, and the Chinese yuan. 

However, El Salvador’s official currency requires the use of intermediary U.S. and European banks, which pose a significant risk of Western intervention. Ilyukhin also identified cryptocurrencies as a pragmatic approach for Russians to complete payments freely in different countries. 

El Salvador considers BRICS membership

According to Ilyukhin, El Salvador is also considering joining the BRICS to boost its economic development. Ilyukhin also hinted that the two countries may resolve to establish a Russian embassy in El Salvador since the pro-Bitcoin nation already has an embassy in Russia. 

The pro-Bitcoin nation has maintained an impartial stance on the Ukraine-Russia conflict and has also shown its resistance to Western pressures. The impartial stance on the Russia-Ukraine conflict and El Salvador’s resistance to Western pressures have paved the way for the country’s strong alliance with Russia. Russia has also considered restarting direct flights to El Salvador to accelerate bilateral interactions further.

In 2021, President Bukele’s country became the first nation to accept Bitcoin as a legal tender. The president of the Latin American country, Nayib Bukele, announced the news at the Bitcoin 2021 conference held in Miami. According to Bitcoin Treasuries, the Salvadoran government possesses 5,800 bitcoins worth upwards of $390 million as of this publication.

From September 2021 to May 2024, the Latin American country mined 474 bitcoins due to a volcano-powered geothermal power plant.