Three months after its legislature passed Bitcoin law that said “every economic agent must accept the use of Bitcoin as a legal form of payment under the law,” El Salvador has officially made the cryptocurrency a legal tender.
In June of this year, the El Salvadoran Legislature voted to pass Bitcoin as a legal tender.
The vote was won by a majority of 62 out of 84 votes of the El Salvadoran legislature who voted in favour of President Nayib Bukele’s proposal for the country to adopt Bitcoin as a legal tender.
Bukele had argued that the need to adopt Bitcoin as a legal tender came about as a result of the financial inclusion gap that exist in the country.
El Salvador is home to approximately 6.5 million people in which 70% of them do not have access to financial services.
The passing of the law, which is now dubbed ‘Bitcoin Law,’ has had significant push back from international bodies such as the International Monetary Fund (IMF) and the World Bank, both disapproving of the step the Latin American country is taking, but the opposition did not deter the government.
The government has been making significant investments to aid the adoption of Bitcoin in the country. First, as an incentive to adopt Bitcoin, the government stated that the adult population of El Salvador will receive $30 worth of Bitcoin when they use the government issued wallet called “Chivo.”
According to Willy Woo, an on-chain analysis expert, the total adult population of El Salvador is around 4.5 million. Although the exact figures are hard to find, Statista, in 2019, said the population aged 15 and above was 4.72 million. Using Willy Woo’s estimation, the government will be looking to purchase $135 million worth of Bitcoin to fulfil its promise to the people. This is evident as the President announced that the country has bought 400 BTC and is expected to buy more.
Asides from this, the government has been able to install over 200 government-backed crypto ATMs, which would allow local citizens to exchange between Bitcoin and USD without paying commissions.
Last week, El Salvador’s Legislative Assembly also passed legislation to allow for the creation of a $150 million dollar Bitcoin Trust to support the development of crypto infrastructure and services across the country. The Trust is designed to facilitate conversion of Bitcoin into U.S. Dollars and support the roll out of vital technological infrastructure enabling widespread adoption of crypto assets.
While the move marks a world-first, El Salvador’s President Nayib Bukele said in a tweet the “bitcoin process” in the country comes with a “learning curve.” He stated, “We must break the paradigms of the past. El Salvador has the right to move toward the first world.”