President Nayib Bukele said that when the law goes into effect in September, accepting bitcoin will be optional.
“Nobody will have to accept bitcoin if they don’t want to,” Bukele said. The Legislative Assembly of Salvador on June 9 approved a law making bitcoin a legal tender in the country, making it the first country to do so.
Zelaya said $120 million would come out of the government’s General Fund for the accounts. “A person who registers to promote the scheme will receive $30 in bitcoins.” “We expect to reach a maximum of 4 million wallets, which would mean covering $120 million, but I don’t think we will be able to reach that amount,” he said. El Salvador’s national debt is already reaching worrying proportions.
The company, which has operated a bitcoin ATM in the Salvadoran beach town of El Zonte for nearly a year, announced that it is installing a second machine in the capital and plans to put at least a dozen others in shopping malls. Machines give dollars for bitcoins or take dollars and give credits in bitcoins.
The digital currency can be used in any transaction in El Salvador and any business must accept payment in bitcoin. In this, those people can be left who do not know how to use them due to technical reasons. The US dollar will also continue to be the currency of El Salvador and no one will be compelled to pay in bitcoin according to the law.
The exchange rate between the two currencies will be decided by the market. All prices will be able to be expressed in bitcoins. However, for accounting purposes, the dollar will remain the reference currency. The government will train those people who will be able to do bitcoin transactions. The economy ministry has said that 70 percent of Salvadorans do not have access to traditional financial services. He said the country needed to “authorize the circulation of a digital currency that specifically complies with free market norms” to stimulate growth.
The President said that this will lead to increased financial inclusion, investment, tourism, innovation and economic growth. The legislature established a government trust fund to guarantee automatic convertibility into the dollar. El Salvador received about $6 billion (about Rs 44,535 crore) last year from Salvadorans living abroad, which is about 16 percent of the country’s GDP. Bukele has said that bitcoin could eliminate the cost of sending that money home.
Experts say it is unclear how highly volatile cryptocurrencies would be a good choice for unbanked people. Only time will tell whether the new system translates into a real investment in El Salvador.