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El Salvador Seeks To Be The First Country To Legalize Bitcoin as Legal Tender

El Salvador President Nayib Bukele intends to introduce a bill to legalise Bitcoin (BTC) as flat money. If the national Congress pass the bill, the Central American nation will become the first country to accept Bitcoin as legal money, alongside the U.S. dollar.

Bitcoin expected to prompt financial inclusion

The 39-year old leader noted that BTC would boost the nation’s economy while addressing the Bitcoin 2021 conference in Miami, Florida State in a video broadcast. President Bukele stated:

“Next week I will send to congress a bill that will make bitcoin a legal tender.”

The bill intends to generate jobs in a nation where 70% of the population works in the informal economy and does not hold a bank account. President Bukele explained:

“In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy.”

He pointed out that financial inclusion should be considered a moral imperative and a way to boost the economy. Furthermore, it is a way that offers access to investment, savings, credit, and secure transactions.

Transforming the future of finance

The El Salvador president also disclosed the nation’s partnership with digital wallet firm Strike to transform the country’s financial structure using Bitcoin technology.

Bukele noted:

“We hope that this decision will be just the beginning in providing a space where some of the leading innovators can reimagine the future of finance.”

On the other hand, Jack Mallers, Strike founder, acknowledged:

“What’s transformative here is that bitcoin is both the greatest reserve asset ever created and a superior monetary network. Holding bitcoin provides a way to protect developing economies from potential shocks of fiat currency inflation.”

Meanwhile, a leading British multinational bank Standard Chartered, recently announced setting up a joint venture to buy and sell cryptocurrencies like Bitcoin. The Bank stated that it was actively seeking to establish partnerships with Hong Kong digital asset experts in launching a cryptocurrency exchange committed to developing digital assets.

El Salvador Airdrops $30 for Bitcoin Handout, BTC Will Become Legal Tender in September

El Salvador President Nayib Bukelet announced Bitcoin (BTC) would become another legal tender, effective on September 7. The government is also giving a cash handout by offering $30 in Bitcoin to the public.

Bitcoin along the dollar will become the legal tender in El Salvador in September. People can choose any of them as a payment medium.

To attract and stimulate the widespread use of Bitcoin in El Salvador, El Salvador’s President Nayib Bukele pitched on Twitter that the government will launch a new product called “Chivo” E-wallet, meaning “cool” in Spanish. Every user who downloads and registers the e-wallet will get Bitcoins worth 30 US dollars.

Bukelet stated that:

“The purpose of Bitcoin law is to connect our country with the rest of the world, bring foreign exchange, investment and tourism, and boost our economy.”

This App will supports users conduct transactions, payment and remittance by scanning QR codes. It can also buy and sell Bitcoin exchanges and covert Bitcoins and U.S. dollars instantly in the e-wallet. The platform is suitable for Android and iOS devices and is expected to launch in September.

The public can transfer or receive their money or in Bitcoin directly or transfer to the recipients’ accounts in US dollars through the “Chivo” e-wallet. Bukelet stated that the public is not mandatory to use Bitcoin if they are unwilling to accept Bitcoin.

Some voices are concerned if the use of Bitcoin will turn out to commit a crime or illegal activities. Bukele insisted that the U.S. dollar will continue to circulate at the same speed as Bitcoin. He added that salaries and pensions would continue to be paid in U.S. dollars.

Meanwhile, American Bitcoin ATM producer Athena Bitcoin announced that it intends to invest more than $1 million by installing more than 1,500 cryptocurrency ATMs in El Salvador, providing residents with a more convenient channel to buy and sell bitcoin and promote Bitcoin transactions.

El Salvador has become the first country to adopt Bitcoin as legal tender since early this month after the national congress passed the so-called “Bitcoin law” with 62 votes approval out of 84.

Bitcoin, the world’s largest cryptocurrency with a market cap of $640,230,486,459, was trading at $34,081.52 during the intraday, according to Coinmarketcap.

Paraguay Introduces Bill to Make Bitcoin Legal Tender

South American nation Paraguay has introduced a bill in its national assembly to make Bitcoin a legal tender, trailing the path of El Salvador.

Congressman Carlitos Rejala introduced the Paraguayan Bitcoin bill, which will position Paraguay to advance in line with this new generation if the bill passed successfully.

“As I was saying a long time ago, our country needs to advance hand in hand with the new generation. The moment has come, our moment. This week we start with an important project to innovate Paraguay in front of the world!” Rejala said in a Tweet, per a Google translated version.

The idea behind implementing Bitcoin as a legal tender has long been debated amongst the cryptocurrency communities. El Salvador President Nayib Bukele broke history when he officially persuaded lawmakers to pass the Bitcoin as a Legal Tender Bill. Following the plans to affect the implementation of the cryptocurrency by September 7th.

Learning from El Salvador’s current struggles, the roadmap on implementing the Bitcoin bill may be arduous. First, the International Monetary Fund (IMF) warned of legal and economic challenges that may impact the implementation and eventual transition to Bitcoin in El Salvador.

Additionally, the World Bank refused the Caribbean Island nation’s request by offering help to implement plans, citing the lack of transparency and environmental considerations. Paraguay may face similar challenges if the administration insists on conducting this path.

Just as El Salvador is planning to venture into Bitcoin mining through Geothermal energy obtained from its Volcanoes, Rejala and the proponents of the Bitcoin bill believe Paraguay can also leverage its excess hydroelectric to mine Bitcoin.

According to Euronews, the bulk of Paraguay’s energy is currently sold to neighbouring countries, including Brazil and Argentina. While the Bitcoin bill is still in its infancy, the country’s Bitcoin industry stakeholders are gearing up for the opportunities that lie ahead.

More than 75% Salvadoran Distrust in Bitcoin as Fiat Money, Poll suggests

A poll showed that more than three-quarters of Salvadorans are sceptical towards the implementation of Bitcoin across the country, according to Reuters, citing a survey released Thursday.

About 54% of people viewed the bitcoin adoption as “not at all correct”, another 24% described it as “only a little correct.”

In comparison, merely less than 20% of people agreed with the cryptocurrency plan implemented by the government.

“This is a risky bet on digital transformation,” Oscar Picardo said, head of Disruptiva’s institute of science, technology and innovation, speaking at an event to publish the survey results. Some critics even describe the so-called “Bitcoin law” in El Salvador rob the freedom of choice of its people.

This poll surveyed more than 1200 people across the country between July 1-4, conducted by the pollster Disruptiva, affiliated with Francisco Gavidia University.

The poll also showed that nearly 65% of the respondents said they would not open to pay in the cryptocurrency, while 46% of the respondents “nothing” about Bitcoin.

The “Bitcoin Law” approved and passed by Congress in El Salvador last month, becoming the first country worldwide to adopt cryptocurrency as legal tender.

El Salvador President Nayib Bukele actively promoted the application of Bitcoin. The government later announced Bitcoin would function, effective on September 7th, as another fiat money along with the U.S. dollar in the country.

To boost the legitimacy of Bitcoin and strive for more support from the public, the government even launched an airdrop campaign by providing $30 worth of Bitcoin incentives to all users who register to its e-wallet.

Meanwhile, the government is actively seeking assistance from the Central American Bank for Economic Integration (CABEI).

JPMorgan: El Salvador to Face multiple Obstacles on the way to Implement Bitcoin as Fiat Money

JPMorgan Chase, citing a report, stated that El Salvador’s designation of Bitcoin as legal tender would bring various obstacles to its country, questioning the robustness of the payment mechanism, Bloomberg reported Monday.

A team at JPMorgan Chase stated that Bitcoin’s cross-traffic liquidity, high price volatility, and USD exchange risk are the main challenges for its use as a legal tender.

According to Bloomberg’s report Monday, JPMorgan Chase, citing a report that the daily trading volume of Bitcoin exceeds $40 billion to $50 billion, but most of the transactions come from cryptocurrency exchanges.

The report added that a significant portion of Bitcoin is locked in less liquid entities. More than 90% of bitcoins are tied to “wallets with low turnover”-held without changing hands in more than a year.

The team from JP Morgan Chase said:

“Daily payment activity in El Salvador would represent ~4% of recent on-chain transaction volume and more than 1% of the total value of tokens which have been transferred between wallets in the past year.”

The report believes that due to the nature of Bitcoin itself, transactions will become “potentially a significant limitation on its potential as a medium of exchange.”

On June 9, El Salvador became the first country to adopt bitcoin as legal tender, with 62 votes approval out of 84. Later on, El Salvador President Nayib Bukelet announced Bitcoin (BTC) would become another legal tender, effective September 7.

However, the initiative of president Bukele to make Bitcoin a legal tender in the country has sparked a lot of national discussions.

As reported by Blockchain.News on July 9, more than three-quarters of Salvadorans are sceptical towards the implementation of Bitcoin across the country. About 54% of people viewed the bitcoin adoption as “not at all correct”, another 24% described it as “only a little correct.”

In addition to the poor liquidity of the asset, El Salvador also faces the high volatility of Bitcoin pegged to the U.S. dollar when it is pegged to the U.S. dollar. The bank stated that the exchange of Bitcoin and U.S. dollars on government platforms might “cannibalize the liquidity of onshore U.S. dollars”, leading to risks to the balance of payments and fiscal stability.

Paraguay To Introduce Bitcoin law, Draft Leaks details

Paraguay is expected to be another country worldwide to propose Bitcoin law after El Salvador, Bitcoin as Fiat Money.

The incoming bill is expected to introduce on Wednesday local time, which would request registration of cryptocurrencies under the Under-secretariat of State of Taxation (SET), according to Decrypt, a report Tuesday, citing a leaked draft copy in Spanish.

“The objective of this draft law is to establish legal certainty, financial and fiscal in the business derived from the production and commercialisation virtual assets”.

On the other hand, the bill would also regulate trading and crypto mining through exchanges and peer-to-peer marketplaces where require users to register as obligated subjects, based on Decrypt’s reporting. Therefore, “virtual asset mining should be recognised as an industrial activity within the Ministry of Industry and Commerce since it uses capital, labour, machinery and construction of civil infrastructure for produce a product,” according to the draft.

Legislator Carols Rejala and Senator Fernando Silva Facetti, two congressmen who belong to separate and different parties are considered the founding members to facilitate Bitcoin in the country jointly. Rejala has expressed his ambition on Twitter to push an important project, referring to the campaign of launching Bitcoin law.

Bitcoin nation?

Paraguayan is very likely to become the first country in South America and the second country worldwide to adopt Bitcoin as legal tender after El Salvador if the Paraguayan congress successfully passes the Bitcoin law.

El Salvador has approved and announced to adopt Bitcoin as legal tender, effective from September 7, as the Latin American country, passed the Bitcoin law since June. Yet, more than three-quarters of Salvadorans are remaining cautious and sceptical towards adopting this emerging fiat money.

Voices concern if Paraguay could successfully facilitate Bitcoin to reform its monetary policy.

Bitcoin was trading $31.923.4, down by 4.0% during the intraday, bounced by the low at the $31,711.06 level.

El Salvador Standing by to Rollout 200 ATMs for Converting Bitcoin to Cash

El Salvador’s government has started installing Bitcoin ATMs to allow citizens to convert the crypto into US dollars and withdraw it in cash.

El Salvador President Nayib Bukele stated that his government plans to install the first 200 Bitcoin ATMs to accompany its digital wallet called “Chivo”. The president also announced that there would be 50 financial branches across the nation for withdrawing or depositing money.

However, president Bukele stated that the use of Bitcoin as legal tender would not be mandatory.

Bukele talked about the use of Bitcoin digital wallet, stating that citizens will be able to accept payment in Bitcoin or dollars, download a digital wallet called “Chivo” and manage the cryptocurrency from there, or converted it into cash at one of the 200 ATMs that will be available in the country.

Bukele also announced that such Bitcoin transactions would be commission-free, stating that El Salvador residents will receive money from friends or family and send and receive remittances through Bitcoin without paying a single cent of commission to anyone.

He stated that his government would not force any of the country’s citizens to receive Bitcoin as a payment method.

“If they want to. If they don’t, don’t download anything, and that’s it,” President Bukele.

Bukele further mentioned that Salvadorans abroad would use Bitcoin to send money instantly to family members living in the country – they can send Bitcoin or send dollars if they want. The adoption of Bitcoin will save local citizens $400 million per year in fees for receiving remittances from abroad, President Bukele added.

Last week, Finance minister Alejandro Zelaya stated in a local TV interview that the use of Bitcoin and digital wallets in El Salvador would be “totally optional,” and businesses that do not accept the cryptocurrency will not be penalised.

Furthermore, the finance minister said that El Salvador’s Bitcoin law would take effect on September 7. Citizens will be able to download the government’s Chivo digital wallet, enter their ID number and receive a bonus worth $30 in Bitcoin.

Developing Nations Could Follow El Salvador

El Salvador lawmakers passed the bill in June this year, recognising Bitcoin as legal tender. President Bukele signed the law afterwards, and the nation had to wait for another 90 days for the law to be fully enacted in the country’s Official Gazette by September 7. Bukele said that the Chivo wallet app would be available in app stores by September 7 as well.

El Salvador made a historic and unprecedented move that spurred excitement in the cryptocurrency communities and caused scepticism for some stakeholders. The World Bank rejected El Salvador’s request for assistance with the implementation of Bitcoin as legal tender. The IMF (International Monetary Fund) also warned El Salvador against using Bitcoin as legal tender.

Following El Salvador’s move to make the cryptocurrency legal tender, politicians in Panama, Brazil, Paraguay, and Argentina took social media to endorse the decision.

Of these countries, it looks more likely that Paraguay and other developing nations will soon follow El Salvador’s example or at least introduce favourable laws towards cryptocurrencies.

El Salvador Lawmakers Passes $150M Bitcoin Trust Fund into Law

Ahead of the September 7th scheduled date to make Bitcoin (BTC) a legal tender in the country, El Salvador’s parliament has approved the law to establish a $150 million Bitcoin Trust Fund.

As reported by Reuters, the parliamentary vote in the Central American country came in at 64 votes in favour and 14 votes against the proposed Trust Fund.

The Bitcoin Fund will let El Salvadorans convert their Bitcoin assets into the United States Dollar, the country’s known legal tender to wade off the impact of the extreme volatility of the cryptocurrency. As detailed by President Nayib Bukele, the fund will aid businesses to accept Bitcoin payments without the fear of price slump or loss.

Per the coverage, the capital for the new fund will be redirected from the country’s finance ministry’s current budget. It will be administered by the state development bank of El Salvador (BANDESAL). Reuters also reported that a congressional document highlighted that “the purpose of this law is to financially support the alternatives that the state provides, without prejudice to private initiatives, that allow the user to carry out the automatic and instantaneous convertibility of bitcoin to the United States dollar.”

El Salvador is the first country in the world to make a move to adopt Bitcoin as a legal tender. The bold approach has been faulted by global financial bodies, particularly the International Monetary Fund (IMF) and the World Bank. At the same time, warning of the economic dangers of cryptocurrency adoption, the World Bank has denied all forms of technical assistance to the country on the environmental impacts of Bitcoin mining.

There is a growing expectation on the Bitcoin as a legal tender move by El Salvador as its impact on remittance costs will directly influence how other neighbouring nations will adopt the cryptocurrency also. At the moment, Paraguay is also bullish on Bitcoin while the regional bank, CABEI, is providing the necessary assistance El Salvador needs to adopt the cryptocurrency fully.

El Salvador Embraces Virtual Currency Era, Nayib Bukele: Just Bought 200 New Bitcoins

Central American nation El Salvador officially adopts Bitcoin as legal tender Tuesday, becoming the first country to embrace Bitcoin as another circulating fiat currency alongside the US dollar.

President Nayib Bukele revealed on Twitter, saying the country “just bought 200 new coins, we now hold 400 Bitcoins” after the country implemented a new monetary policy.

The price of Bitcoin has broken through the $52K level, trading at $52.751K at 11:11 a.m Hong Kong time, according to data provider CoinMarketCap.

Speaking in Spanish, Bukele urged his citizens “must break the paradigms of the past”, as “El Salvador has the right to advance towards the first world”.

“Like all innovation, the process of #Bitcoin in El Salvador has a learning curve. Every road to the future is like this, and not everything will be achieved in a day, or in a month.”

Before the launch of Bitcoin, CEO of MicroStrategy Michael Saylor retweeted Bukele’s message on Monday, saying that he “is planning to buy $30 worth in BTC in solidarity” to support Salvadorans.

Bitcoin ATMs installed

El Salvador historically passed the “Bitcoin law” in June as the first nation worldwide. However, global financial institutions, such as IMF and the World Bank, were concerned if its implementation and even worried that its adoption may trigger further uncertain monetary or regulatory risks. At the same time, regional bank CABEI offered technical assistance to the country.

The dollarized economy in El Salvador is heavily reliant on remittances sent home by migrants overseas, which totalled $6 billion last year and accounted for roughly a fifth of gross domestic product, according to a Bloomberg report. Bukele claimed that Bitcoin could save Salvadorans $400 million a year in fees for these transactions.

Earlier this month, legislators have passed the $150M Bitcoin Trust Fund into the law, allowing Salvadorians to covert crypto-assets into U.S. dollars or vice versa. Bukele’s administration has installed around 200 Bitcoin ATMs nationally so far.

Domestic resistance exists

Yet, domestic scepticism and resistance still exist against the adoption of Bitcoin as fiat currency. Reuters reported last Thursday, citing a poll by UCA, a local university in El Salvador, that at least 67.9 % of the 1,281 people surveyed opposed or strongly disagree with the government’s decision on new monetary change.

Other nations are still observing if Bitcoin could “save” the economy. For example, Paraguay also introduced a bill to propose bitcoin as a legal tender.

Panama Looks to Legalize Bitcoin and Ethereum in Line with El Salvador

Another country in Central America, Panama, is joining the ranks to legalise blockchain technology and cryptocurrencies and its flagship asset- Bitcoin (BTC). According to the update from Panamanian Congressman Gabriel Silva, a crypto law has been presented to the national assembly to position the country at the forefront of technology innovation.

Going on to explain why the move to legalise cryptocurrencies is a good option for Panama, the 32-year-old congressman listed the enhancement of job creation, the support for innovation, government transparency, the emergence of new businesses or ventures, decentralisation, and the expansion of what the country’s financial services industry currently offers.

“Today, we present the Crypto Law. We seek to make Panama a country compatible with the blockchain, crypto assets, and the internet. This has the potential to create thousands of jobs, attract investment and make the government transparent,” the lawmaker said based on the translation of his tweet.

“Panama should not be left behind. Let’s go from the profitable world to the futuristic pro Mundi. To a more inclusive economy. A country at the forefront of innovation and technology.”

The attempt by Panama will follow a similar trend by El Salvador, which battled months of negotiations amongst lawmakers and the international financial bodies, including the World Bank and the International Monetary Fund (IMF). While El Salvador has enacted the Bitcoin-as-a-Legal tender law today, the journey was not as smooth for the country.

The journey to possibly legalise Bitcoin will see Panama battle resistance from the World Bank in the technical implementation of its proposed dive into the digital currency world, just as the monetary watchdog denied El Salvador. Monetary ties may also be cut off by these financial organisations, emphasising the energy requirement that Bitcoin or most blockchain protocols demand.

While the proposed Panama crypto law has no defined timeline, the lawmaker noted that inputs are welcome to improve the proposal’s provisions.