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Salvadoran President Nayib Bukele. Photo: MARVIN RECINOS / Getty Images

El Salvador, wracked with gang violence, has a reputation for being the deadliest place on the planet that isn’t an actual war zone.

Driving the news: It’s also newly hot in the crypto world, after President Nayib Bukele announced (and swiftly enacted) a law saying his country would accept bitcoin as legal tender.

Context: El Salvador hasn’t had its own currency since 2000, when it switched to the dollar. It therefore loses no sovereignty or seignorage by adopting a second external currency as legal tender.

  • The law makes any capital gains from investing in bitcoin tax-free, which Bukele hopes will attract some of the crypto industry to his country.

Between the lines: Bukele’s authoritarian and anti-democratic tendencies are probably stronger than his grasp of economic concepts like the distinction between stocks and flows.

How it works: The Salvadoran government intends to set up a trust at the Development Bank of El Salvador “to instantly convert bitcoin to U.S. dollars.”

  • The risk here is that El Salvador, either by accident or design, will become a commission-free laundromat for any criminals wanting to turn dirty bitcoin into clean dollars.
  • Bukele has frequently been accused of working closely with the MS13 gang in particular.

Be smart: Bukele has framed this move as helping facilitate remittance flows into the country. But bitcoin has not played an important role in remittances anywhere.

  • As cryptocurrency consultant Eloisa Marchesoni told Fortune, Bukele’s idea, given bitcoin volatility and gas fees, “does not make sense at all.”

Our thought bubble via Coindesk's Nikhilesh De: Most other countries are letting businesses make their own decisions around whether they want to handle bitcoin. Others prevent them from touching the cryptocurrency. El Salvador is bucking the trend by trying to force businesses to accept the cryptocurrency.

  • Few countries — even those without their own currency — are expected to follow suit.

The bottom line: El Salvador’s move does nothing to reassure observers who worry that bitcoin’s prime real-world use case is crime.

Go deeper

El Salvador passes law to become 1st country to adopt bitcoin as legal tender

President Nayib Bukele during a May 25 event in San Salvador, El Salvador. Photo: AphotografiaP/Getty Images

El Salvador's legislature voted early Wednesday to make bitcoin legal tender.

Why it matters: El Salvador will become the first country to formally adopt the digital currency once President Nayib Bukele signs the legislation into law.

Pacific Northwest soon to be ground zero for record-shattering heat

Computer model projection showing the unusually strong heat dome over the Pacific Northwest on Sunday. (PivotalWeather).

A heat wave is bringing unprecedented high temperatures to the Pacific Northwest — a region of the country typically cooled by the ocean, rather than central air conditioning. The heat will begin Friday and last into early next week.

Why it matters: The heat wave will shatter monthly and all-time temperature records in the Pacific Northwest. Some of the records could break the old milestones by several degrees.

Dan Primack, author of Pro Rata
10 mins ago - Economy & Business

The crypto kings

Illustration: Shoshana Gordon/Axios

Bitcoin is largely a wash for 2021, but that isn't dimming crypto optimism among venture capitalists or their deep-pocketed limited partners.

Driving the news: Andreessen Horowitz this morning announced that it's raised $2.2 billion for its third crypto-focused fund.