The President of El Salvador has said that the use of the Bitcoin cryptocurrency will not be mandatory, but the country plans to give starter accounts with $ 30 to promote its use.
Finance Minister Alejandro Zelaya said on Thursday the government would allocate $ 120 million to establish up to 4 million starting Bitcoin accounts, or “wallets,” although he doesn’t think many people will agree to it. ‘offer. Wallets should be known as “Chivo”, a slang word meaning “cool” or nice.
President Nayib Bukele has said that when the law goes into effect in September, acceptance of Bitcoin will be optional.
“No one will have to accept bitcoin if they don’t want to,” Bukele said.
El Salvador’s Legislative Assembly on June 9 approved a law making Bitcoin legal tender in the country, the first nation to do so.
Zelaya said the $ 120 million for the accounts will come from the government’s general fund. “Upon registration, the person will receive $ 30 in Bitcoins” to promote the program, Zelaya said.
“We hope to reach a maximum of 4 million portfolios, which means covering $ 120 million, but I don’t think we will reach that amount,” he said.
El Savador’s national debt is already reaching worrying proportions.
The company that has been running a Bitcoin ATM in the Salvadoran seaside town of El Zonte for about a year has announced it is installing a second machine in the capital and plans to install at least a dozen more in shopping malls. . Machines give dollars in exchange for Bitcoin or take dollars and give Bitcoin credits.
Digital currency can be used in El Salvador in any transaction and any business will need to accept payment in Bitcoin except those that do not have the technology to do so. The US dollar will also continue to be the currency of El Salvador and no one will be required to pay in Bitcoin, according to the law.
The exchange rate between the two currencies will be established by the market and all prices may be expressed in Bitcoin – although for accounting reasons the dollar will continue to be the base currency.
The government will encourage the training of people capable of transacting with Bitcoin.
The Ministry of Economy said that 70% of Salvadorans do not have access to traditional financial services and declared that the country “must allow the circulation of a digital currency whose value follows exclusively the criteria of the free market” to stimulate growth.
The president said it would increase financial inclusion, investment, tourism, innovation and economic development.
The legislation established a government trust fund to ensure automatic convertibility into dollars.
El Salvador received some $ 6 billion in remittances last year from Salvadorans living abroad, or about 16% of the country’s gross domestic product. Bukele said Bitcoin could eliminate the costs of sending that money home.
Experts say it’s unclear how the highly volatile cryptocurrency will be a good option for the unbanked and only time will tell if the new system will translate into a real investment in El Salvador.
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