#25 - El Salvador's National Bitcoin Office

0:00Stacey, welcome to the Numeric State Conference. Thank you for speaking on behalf of the government of El Salvador. Great to have you here. It's great to be here. You know, I posted this on X and people are so excited to watch it. So I can't wait to get into this interview. Amazing. So, you know, as we know, El Salvador was put on the map by President Bichelli for the last four years, had a meteoric ascent. Nobody really talked about it or cared about it before 2021, 2020. And now, you know, it's a startup country. Why don't you tell me a little bit about El Salvador and then yourself and your position there?

0:36So, first of all, my name is Stacey Herbert and I am the director of the National Bitcoin Office of El Salvador. I am in El Salvador because El Salvador is Bitcoin country. As you mentioned, that's the beginning of a network sort of state. And the remarkable thing about El Salvador is Bitcoin country. So everybody knows El Salvador is Bitcoin country, right? You know it. Your audience knows it. Everybody knows this. Now, before that, like literally the month before that, if you had Googled El Salvador, all you came up with was El Salvador is homicide capital of the world. After Bitcoin became legal tender, it was El Salvador is Bitcoin country.

1:20This is one of the greatest rebrands in history, if not the greatest, to go from murder capital of the world to Bitcoin country within one single day. Now, the thing is, it wasn't just, it was a rebrand, but it was also substance. Yes, I was just going to get into that. Yes, yes. Go ahead. Yeah, I mean, you can't just have a marketing gimmick, especially with Bitcoiners, right? So we have the new layer one capital. We have gold, U.S. treasuries, and Bitcoin. So how are you going to get these best and brightest in the world who now have your attention? You have not only the attention of the financial press, right?

2:01And that's the most important press in the world because it's not politics. It's not culture. It's not entertainment. It's not local and domestic. It's international. Wall Street media has international attention because everybody wants to know what interest rates are, U.S. interest rates are, what the stock market is doing, what gold prices are doing. This translates internationally. So suddenly, you know, when El Salvador adopted Bitcoin as legal tender, the world's financial press had to cover El Salvador. They had no choice but to cover El Salvador. They tried to at first be, you know, quite flippant and mocking of us.

2:37But President Michele is witty. He's smart. He's charming. He's, you know, quite brilliant. And he just couldn't they then couldn't turn away their lens. They kept on focusing on him and hoping he made a mistake, but he didn't. Part of it is because he just kept delivering actual results. It wasn't just a marketing campaign because if it had been, they would have sussed it out. But they couldn't stop because we did start building real things. And one of the things we started with is that I knew that Bitcoiners would suss it out if it were just a marketing campaign. We had to build real things.

3:17And the first thing was the security environment. So that's why I think of him as Bukele Lee Kuan Yew, right, where the first thing was physical security and then on top of that, international capitalism. Go ahead. Yeah, sure. You know, I'm actually reading Lee Kuan Yew. I know you're in Singapore, so you are a big fan of what Lee Kuan Yew has done for Singapore. And many people compare El Salvador to Singapore naturally because we're two small countries in tropical climate, no resources. Now, I'm reading from Third World to First, and one of the things that has struck me about it was that he was very much inspired by Israel, right?

3:57So how Israel was a startup nation with no resources and how they leapfrogged to the top was through education, innovation, and discipline. So these are the things that we also have in El Salvador. It's the discipline part of it from the Bitcoin office is staying very focused on Bitcoin country. This is what we are. This is our brand. We've got the world's attention with this. The best and brightest are looking at us. Now we need to deliver not only the regulatory framework. And remember at that time in 2021, 2022, we had the Biden administration. We had Gary Gensler. And there was there was everybody was seeking some regulatory clarity.

4:46So I said, well, let's give them regulatory clarity and just do exactly because, you know, how it is in, you know, in America's backyard, as they like to think of Latin America is there was already a lot of blowback in the U.S. from the Democrats about El Salvador adopting Bitcoin. And so I said, let's just do exactly what they're saying, right? Let's build a regulatory framework with what the builders want. And what Gary Gensler is saying is Bitcoin is a commodity. Everything else is a security. So we built a regulatory framework around that to invite people to have, we have the regulatory clarity, right?

5:25Like, come build here in El Salvador. I really appreciate that, which is you built a platform that actually, you know, one might disagree or agree with whatever regulatory is, but you actually built a concrete thing. It wasn't some vague regulation by enforcement. You said, here's what's permissible. Here's the process. You can come in and actually you managed to bring in Tether, which is, you know, like a top 20 global bank or what have you at this point, as well as obviously Bitcoin Beach and a bunch of other things. Exactly. So, I mean, this is the regulatory clarity, but on top of it, a definite brand, right?

6:04We're not just like everything. We're not, you know, we're not, you know, it's a very specific brand. So if you look at INSEAD, the well-known business school, it's a very prestigious business school. And they looked at El Salvador just last year. And what they saw was that the Blue Ocean Strategy, which is a very famous strategy in business, and at a country level, they're saying this is a country strategy where they clearly define themselves apart from all of the rest of the countries in the world, not just the region. is they are Bitcoin country. And so you're naturally already attracting not only wealthy people, but the best and the brightest and the smartest, right?

6:52The smartest people in the world got Bitcoin early. You're an early Bitcoiner. Like you obviously looked at El Salvador, right? As soon as we adopted Bitcoin as legal tender, you're like, what is El Salvador? And you wanted to know more. That's right. Now, the thing is, I do think it also shows, I mean, you know, it is it's a little self-regard to say all as far as people are. But I do think there's a lot of very talented computer scientists, investors and so on who were contrarian and correct on on Bitcoin. And it showed that President McKellie has the soul of a tech founder. Yes. So that's really the important thing.

7:32It's like a tech founder who is running the country, who has the right balance of different things, you know, and and, you know, is is I mean, he's only 40 something, right? Forty three. Yeah. Forty three. Right. So still has lots of runway in front of him and is also, if I'm not mistaken, one of the most democratically popular elected people in the entire world. Exactly. Something like 92 percent favorability rating. Nobody else has something like that. That's right. And so that means that there's consensus for what he's doing. It's legitimate and it's competent, which is the best combination.

8:07Yes. So you're right. He is like a Steve Jobs. He is like an Elon Musk. He has a vision. And to be a great leader, you need quite a few things. Otherwise, we would have more of them in history. But there are only a handful. There are many heads of state, but there are only a few leaders that ever arise. And that is somebody who is so bold. Right. Imagine this. El Salvador was a failed state. Even before he became president. President Bukele was saying things like where El Salvador is going is to the place we want to be. So he said that in 2019. And like the audacious sort of, you know, vision, bold vision of saying like El Salvador might be a failed state right now.

8:59But, you know, in a few years, like five years, we're going to be at the top. And you know what? He took us there. He took El Salvador there. Like, they're -

9:36From murder capital to Bitcoin capital. How's that? Go ahead. Yeah. Well, we're building capital markets on Bitcoin. That was the intention. That's what I knew we could do. We already had the brand. So let's build the capital markets because you can't become a Singapore. You can't become a global economic powerhouse without capital. So we needed either gold, U.S. Treasuries, or Bitcoin. So we could get Bitcoin. And do you do gold? Do you also hold gold? Yes. Yes. President Bukele just recently purchased$50 million worth of gold. I don't know how many ounces that is for the central bank, but we do have gold.

10:15We've had gold for a long time. The previous governments had sold some of it, but he's stockpiling it. So we have the layer one money. We're on a US dollar standard. So we already have US dollars. We have gold and we have Bitcoin. So amazing. However, we have a competitive advantage with Bitcoin. Right. So this is the new capital markets that even Wall Street is now piling on. Remember, when we first adopted Bitcoin as legal tender, there was so much blowback from the global powers. Right. The big, you know, multinational. Yeah. Yeah. Yeah. The government of the United States. And all these kind of guys.

10:51Yeah. And the Biden administration and all the Democrats. And it was, you know, pretty nasty. But now, like BlackRock has one of the most, well, it is the most successful Wall Street financial product in history launched. But we were there first. President Bukele saw that first. And he stuck with it. Like, I was there. I started working for him right as the whole gang war started as well. So the gang war started. But remember, what also happened was Terra Luna, FTX, Celsius, all of that happened. And Bitcoin went from like 68 ,000, 69 ,000 down to 16 ,000. Down to like 10 ,000. Yeah, 16 ,000. That's right.

11:34Yep. So you have the world media looking at you, the world financial media, especially Bloomberg wanted us to fail. They wanted, they didn't want this, like, who is this tiny little country? And why is this guy so confident? like this is like you can't you can't be us like you can't be successful like you know how that works right people don't want to see somebody transform on their own without your help without your NGO without your humanitarian organization without your pennies that you throw to them you did they're not really even they're not and that's the biggest thing is they did not want El Salvador to stand on its own two feet they wanted to be a pawn they wanted to I mean these quote humanitarian organizations, you know, charity is dependency.

12:19Investment is independence. Right. India also learned that, you know. But go ahead. So I'm listening. That's exactly right. And so where was I when that happened? So we got the world's attention. And so I started working there when all that Terra Luna, all that stuff happened and Bitcoin went down. And, you know, he just remained. He had President Bukele had the vision and he knew it was transforming El Salvador. He knew it had rebranded and he knew we were building something. He stuck with it. Yeah, he stuck with it. And I was, you know, I had been around, you know, I was the first person to mention Bitcoin on global television in 2010 at 23 cents.

12:59So I had been through many like crashes and stuff like that. So I, you know, for me individually, it didn't matter. But I could see like there was a pylon from Bloomberg and they were, oh, my God, this is going to be a failed state. When did you join the Bitcoin office? So we created the Bitcoin office by executive decree in November of 2023, maybe 2022. Yeah, 2022. But I had started working, you know, from like January, February of that year. So they did it right in the month that FTX blew up, something like that. Yeah. Well, yeah. When did FTX? Yeah. Because first it was Terra Luna blew up in like April, which is the beginning of the gang war.

13:47And so at first, you know, during the gang, the very first days of the gang war, Max and I, my husband Max Kaiser and I were there in El Salvador. And the gang war started and the U.S. immediately. What was the gang war for people who don't know what that was? So the gang war is, so we were there. Okay. So on, it was something like 24 or 25 of March, 2022, Max and I flew with Ricardo Salinas, the third richest man in Mexico. And he is a Bitcoiner, early Bitcoiner. And we flew with him from Mexico City to El Salvador. We had dinner with President Bukele on like the 24th or 25th. It was a Thursday.

14:31March of 2022. And then literally the next day. And so we were bringing him there as, you know, a Latin American billionaire, a tycoon, business tycoon. And we're like, OK, come invest in El Salvador. And then the next day, over the course of the next 48 hours, there were 87 murders, just random assassinations by the gangs. and take back control of El Salvador after President Vikelli had reduced crime. Yes. And so it was the bloodiest weekend in the murder capital of the world. Like it was historic bloody weekend. So the president started the gang war. So basically since then, the war on gangs, the war on gangs.

15:18Yeah, he he he went after them, locked up 80 ,000 over the course of the next 18 months of all the gangs. And it was quite easy to find them because they tend to put a tattoo on their force. Yeah. It's like, here, I'm, I, you know, I'm marketing El Salvador here. They were marketing MS-13 or, you know, terrorism. They were, you know, they were designated terrorists. And so they, you know, they started, he started arresting all of these gang members immediately, hundreds and hundreds at a time. And one of the things, so Max and I were there and the U.S. government was immediately, of course, all those human rights organizations were like, this is against the human rights of these gangs who had terrorized the people of El Salvador.

16:04Now, where we were staying was in San Bonito, which is like Beverly Hills of San Salvador. Right. So we, you know, it's not like we had seen that. But I knew that, you know, there were like Soyopango, Ilopango, Apopa, these areas in San Salvador outside of the center, which were basically occupied by the gangs. You couldn't drive in. You had to like go through their, you know, checkpoints. So he was liberating them. we knew because we were there on the ground but the media was saying that you know the human rights of these gangsters and some of the bitcoiners at that time they were you know not in the country but they were oh look the u.s is saying that this is uh bad news there and the human rights of these gang members but max and i were there and what we did is we went into those uh after about four or five weeks.

17:00So there were maybe 20 ,000 or 30 ,000 guys locked up by then. But we went into the gang occupied areas because I would see the president tweeting all the time, like we arrested these guys in Apopa, these guys in Illupongo, you know, these guys in Soiopongo. And so that's the first I ever knew about these areas, the specific names of the areas that had been occupied by these gangs. And so Bitfinex at that time had raised$2 million worth of Bitcoin to give away to the victims of gangs. And so we took that money on this exact phone. I have Jamie Dimon on the back, FUD. So I took this and I went into those areas to distribute Bitcoin to the people, a lot of the small businesses, individuals.

17:52I was giving$500 up to$2 ,000,$3 ,000 to certain like the marching band in Soyopongo. I gave them$3 ,000 worth of Bitcoin. I went into a town hall in Soyopongo where eight couples were getting married. They had a group wedding to save money. and I gave them each$2 ,000 worth of Bitcoin. You know, it was very emotional because one of the couples like fell on the ground crying because, you know, it was so, like it was a lifesaver for them and a start to a new life that they didn't expect to have. Like we had just walked in and gave them this money and it was like mana from heaven. Like it was just like, wow, what is this?

18:30But we saw like contrary to the press for our own eyes at this point because we went into these areas and we saw that these were liberated people, right? We could see for, we were talking to them for hours. It's not like we went in for half an hour. We were there for hours without any security, without, it was just me and Max and my phone. And so we were giving away this money. Hundreds of people were surrounding us, like looking for some, these Bitcoin donations we were giving. So, but we talked to all of these people and we could see very early on that this was a genuine liberation. There was no doubt in my mind at all after meeting these people.

19:11So we could see that the war on gangs was working, that it was liberating the people because they were a force for plunder, right? They were plundering not only money. When you saw photos of, if you look back to the 2022, you'll see all these guys being arrested, the gang members, the terrorists being arrested, that they were they had nickels and dimes and pennies, stacks of them. They were stealing nickels from people like this is how. Yeah. They were stealing the last nickel a guy had in his pocket, that this was the sort of extent of the humiliation that had to be endured in these communities.

19:58And President Bukele liberated the people from these gangs. And what it did is that began such a radical transformation of the mindset of the Salvadoran population. Because until that point, the only hope you had in life for success, if you weren't born into it, was to flee your country, to abandon. I have a question, which is, hadn't President Pichelli somewhat brought the gangs under control by 2021? And then this was like a relapse, and then this was then the second dose of medicine, so to speak? This was an all-out war on the gangs. This was a total. Okay, go ahead. This was a total pivot of he knew he had a huge vision.

20:49As you said, he was like a tech founder. He had a vision for how huge and how amazing El Salvador would be. Because remember, what he said was where El Salvador is going is to the place we want to be. And what these gang members, these terrorists were saying is like, no, because we could mess it up for you. We could terrorize the community. We can kill and assassinate 87 random innocent people in the course of 48 hours. And he's like, no, my vision is for greatness. And so if you're standing in the way, we're going to remove you. And he removed them all. He like he's that was his focus for six months for sure, like completely on getting these gang members, the first like hardcore 40, 50 ,000 of them.

21:37And then then we could build like then we could start. start to really build something. And then the consequences, El Salvador's homicide rate has just dropped to one of the very lowest in the world now. It just went from like murder capital to Bitcoin capital. Murder capital to Bitcoin capital. But, you know, having been there for this whole time is the mindset, like what you gave people is so hard to even put a number on it. It's not just the number, the homicide rate. It's not just the GDP. is you gave people like their humanity back. Like they could love their country. They could have pride in their country.

22:15They could build a future. They could have hope for their children. They could be human. They could experience the beauty around them. El Salvador is such a beautiful country. It's shockingly beautiful. It has beautiful oceans. It has volcanoes. It has like just these tropical paradise. And yet so many Salvadorans weren't even able to, even though it's a country, they weren't even able to travel like an hour's drive away because of the danger from the gangs. So you gave them so much that could not even be quantified by anything because you just gave them all of the things that, you know, an American might take for granted, which is freedom and what freedom gives you and freedom of association.

23:02Like they didn't have freedom of association. Like think of these. This is a foundational human right that we have in America. Now think of the human rights organizations that then were looking at El Salvador and like condemning the actions of the president when he was giving them back like these basic human rights like freedom of association. Now they're free to go and hang out with whoever they want, wherever they want. This is great. I want to switch gears a little bit and say, what has El Salvador been doing with AI, particularly in the realm of education? I've been working on the Bitcoin policy and regulatory framework and, you know, building the strategic Bitcoin reserve.

23:44We had the world's first. We have now a regulatory. We pass a law that would allow for Bitcoin banks. So we have that. So I was already looking at El Salvador as building a regulatory framework that would appeal to the best and brightest in the world to attract them to come to El Salvador and build an El Salvador and bring that capital here. And as you know, there's been a lot of convergence over the past few years between Bitcoin and AI and the AI, you know, from Bitcoin miners also doing AI HPC data centers and the investment community and the same builders and engineers. So on my X feed, I was starting to see, I saw opportunity.

24:34So what I saw was that the U.S. was unable to act at a national level on this exponential technology. Exponential innovation is happening. And we were stuck in these states, some states very hostile to innovation. some more favorable perhaps but on a national level they were unable the u.s was unable to act and you saw that president trump tried to put into his big beautiful bill this that he would ban states for a few years from regulating ai and it would be done at the at the national level that that was pulled out of the big beautiful bill so what was happening is all these countries We're the first country in the world to have a complete regulatory framework, a policy framework around AI.

25:32And the reason is most countries are waiting for either the U.S. or EU, one of the big blocks, to go first. And the EU, therefore, is going to be the benchmark if somebody else weren't the benchmark first, because the U.S. is not going to be able to move. So I said, well, the EU is like fining, regulating, preventing, banning. It's very hostile to innovation. There's an opportunity here for us to attract more of the best and brightest. They want to build. These people want to build. These AI geniuses and engineers, it's exponential innovation. Let's provide a regulatory clarity and a framework for them that they'll come build in El Salvador.

26:22And so what is what specifically are the like what should we look for like online? Is it is there an AI bill? Is there what's the name of the regulation? Maybe we could put that on screen. It's AI law. It's right now on my Twitter feed. I'll pin it. You can look at Stacey Herbert on X or Anya, A-N-I-A, the AI agency of El Salvador. and it's the AI law, right? And we're also passed the robot law, but we have to write the regulations still on that. But what is done is - So you have a Bitcoin law, you have an AI law, you're coming up with a robot law. Yeah. Pretty cool. Yeah, yeah, yeah. It's cool because you can see, what I have seen through this is why there's always somewhere that is lightness.

27:06No matter how dark the age gets, there's always a place for lightness because of competitive advantage. Like if everybody else wants to be dark, if the EU wants to ban and restrict and prevent innovation, well, that gives us an opportunity, right? Because you can't stop innovation. You can't stop builders from building. So why not provide them with a safe harbor to build what they want to build? And that's what we've done. So we have this opportunity because we could act fast because President Bukele can act fast. He has the 92 % support from the population. The population elected his party to the assembly, to the Congress.

27:51He has a vision that the population believes in. And he can act fast where many other countries are just torn apart by fear of these innovators, fear of change, fear of losing their power, whether it's like Bitcoin separating money from state. And AI is separating the infrastructure of governance from the state. The tools that AI is giving are so liberating to the people in such a profound way that there's a lot of fear there. But in El Salvador, we don't have the fear. We have hope and we're building for a future that the best and brightest are going to come to El Salvador if we provide the framework for them to tell them, hey, we want you here.

28:44A lot of these countries remarkably are just saying, no, we don't want the best and brightest. It's pure insanity, but it's an opportunity for El Salvador. So that's the next thing that you guys are doing. You have the I think it's you could become an El Salvador citizen for I think, is it a million in Bitcoin? Is that right? A million in Bitcoin. It's like almost instant. It's very fast. We are rolling out some other programs, including the president had announced last year. But we're you know, we're changing the regulatory framework for this, the legal framework to he's going to grant 5000 passports to the best and brightest in the world.