El Salvador will offer small and medium-sized businesses $10 million in cryptocurrency loans this quarter.
The country will partner with the Solana-based platform Acumen, and the loans will bear an annual interest rate of 6% to 7%.
This marks the latest push by President Nayib Bukele, a bitcoin bull, to further mainstream the use of cryptocurrency.
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The Salvadoran government plans to offer small and medium-sized businesses $10 million in cryptocurrency loans this quarter, according to CoinDesk.
The country will partner with Solana-based lending platform Acumen to facilitate loans to El Salvador’s National Commission for Micro and Small Enterprises (Conamype), according to the report.
The loans, Andrea Gómez, Acumen project manager, told CoinDesk, will have an annual interest rate of 6% to 7%, but could reach up to 10%.
That’s a fraction of the 2,300% average annual rate that businesses, largely operating in the informal economy, pay unregistered lenders for loans, said Conamype chairman Paul Steiner.
Under the new lending program, Acumen will convert cryptocurrencies into stablecoins, USDC or tether, and send US dollars to Conamype, which will then distribute the loans to Salvadoran businesses and entrepreneurs.
Gómez said there were 15,000 users on Acumen and he was recognized as a lender to the Central Bank of El Salvador in November.
Crypto lending is the latest step by bitcoin bull President Nayib Bukele to mainstream cryptocurrency in El Salvador, who declared bitcoin legal tender in September. Soon after, he announced plans to build the world’s first “Bitcoin City”, which would use geothermal energy from a volcano to mine bitcoin, and the launch of a “bitcoin bond”. Bukele also announced when El Salvador is “buying the dip” with bitcoin purchases.
But earlier this week, ratings agency Moody’s warned that the country’s bitcoin holdings could increase its default risk, prompting Bukele to hit back on Twitter. Cathie Wood of Ark Invest, meanwhile, hailed bitcoin’s push in El Salvador, saying innovation is improving people’s lives.