In recent years El Salvador has struggled to attract much attention in terms of foreign direct investment (FDI) in financial services and fintech. It ranks fourth in terms of both project numbers and capex in Central America, well behind the region’s leader Mexico.
El Salvador was the destination for just one financial services project in 2017 and one fintech project in 2018, excluding retail banking, and received no FDI in 2019 or 2020, according to FT-owned greenfield data monitor fDi Markets.
However, El Salvador’s adoption of bitcoin as legal tender in September this year has ushered in greater levels of FDI. In the first half of 2021, the country attracted investments for three projects from fintech companies. These projects brought in a total of $39.8m and have created 70 jobs.
All three fintechs – Athena Bitcoin, ChainBytes and Coincaex – are involved in the crypto-asset space. US financial platform Athena Bitcoin, for example, announced plans to invest more than $1m to install 1500 cryptocurrency ATMs in El Salvador. ChainBytes, another US cryptocurrency ATM provider, is setting up a manufacturing hub in the country. Coincaex, a Guatemalan crypto-exchange, has invested $2m to relocate its headquarters to El Salvador following the passing of the Bitcoin Law.
Around the time of ChainBytes’ announcement in June, CEO Eric Grill stated: “El Salvador is showing leadership to the world in implementing bitcoin as a legal currency. We believe in doing so the country is positioning itself to be more of a technology hub. ChainBytes wants to be a part of helping that succeed. Our initiative will provide the training and skilled jobs needed for all Salvadorans, which will, in turn, contribute to the economy and the nation.”
El Salvador’s financial services and fintech FDI uptick looks set to continue, as the country positions itself as a home for the global crypto-community. In November, it announced plans to build a “bitcoin city” at the base of the Conchagua volcano, to take advantage of its geothermal energy to power bitcoin and other cryptocurrency mining.
