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The legislative assembly of El Salvador has passed legislation to create a $150million bitcoin trust to facilitate exchange between Bitcoin and U.S. dollars in the country.
El Salvador is once again in the news for its actions to convert bitcoin into dollars. The legislative assembly of El Salvador has passed legislation to create a $150million bitcoin trust to facilitate exchange between Bitcoin and U.S. dollars in the country.
As per the reports by the local newspaper, the Minister of Economy from El Salvador, Maria Luisa Hayem Breve said that the initial allocation of $150million could increase in future. It was agreed upon on Monday by the deputies of the finance commission of the Legislative assembly.
The bill passed on August 31, with 64 officials voting in favour and 14 opposing the trust’s creation. The trust is formed to make it easy to convert bitcoin into dollars and support the rollout of vital technological infrastructure enabling widespread adoption of crypto assets.
Bitcoin as legal tender
El Salvador in June passed a bill under which it mentions bitcoin as legal tender along with the U.S. Dollars. The bill goes into effect on September 7 and will facilitate businesses to accept payments in bitcoin.
However, the President and Finance Minister of the country has made this clear that the businesses that did not want to deal with the bitcoin payments, will not be penalized.
Move with $150m
The trust will be set up at the Development Bank of El Salvador. It will give the freedom to merchants to quickly convert bitcoin into U.S. Dollars offsetting their risks. As per the reports, the $150million will be redirected from the country’s 500million loan with the Central American Bank for Economic Integration (CABEI).
The CABEI loan is generally taken for economic recovery for small and medium-sized businesses. Out of the total fund, $23.3 million will be used to support the installation of government-backed crypto ATMs. This will give local citizens the ease to exchange between bitcoin and USD.
$30 million has also been put aside to offer incentives to encourage the adoption of the government’s digital wallet, Chivo. To popularise this wallet, President Nayib Bukele of El Salvador had announced in June that the government would airdrop $30 worth of Bitcoin to each adult of the country who downloads the Chivo wallet.
The population of the country currently stands at 6.5 million, suggesting that the government either believes adoption will be lower or has not allocated enough bitcoin.
New deals
Koibanx has signed a deal with the El Salvador government to develop the country’s digital currency infrastructure. The infrastructure will be developed with Algorand’s open-source blockchain at the core.
However, the bitcoin law in El Salvador has been met with criticism from the international government and its citizens. But Breve said that the government is focused on educating people on cryptocurrency and using crypto incentives as a means to soothe the high amount of uncertainty within its population.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
