Government of El Salvador asks for more than US$200 million for its Bitcoin Law

RIO DE JANEIRO, BRAZIL – The government of El Salvador asked the Legislative Assembly to approve the use of more than 200 million dollars to implement the use of bitcoin as legal currency, according to information consulted Wednesday by Efe.

In its Tuesday session, the legislative body approved an initiative of the Minister of Finance to incorporate into the state budget and distribute US$500 million, of which more than $200 million would be applied for the introduction of bitcoin.

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The document states that US$150 million will be for a trust fund, administered by a state bank, to “operationalize the circulation of bitcoin digital currency”.

Such trust would serve the “automatic and instantaneous convertibility” of bitcoin to dollars and “bonus for electronic wallet”.

At the initiative of Nayib Bukele’s Executive, the Treasury also requested to allocate US$23.3 million for the “Cryptofriendly” project, which seeks to “finance the implementation of the Bitcoin Law”.

Another US$30 million, according to the document, would be destined for the delivery of a bonus or incentive in bitcoin for the use of the governmental electronic wallet.

These funds come from a loan of US$600 million granted by the Central American Development Bank (CABEI) for the Trust for the Economic Recovery of Salvadoran Companies (Firempresa).

With this trust fund, credits and subsidies were granted for the covid-19 pandemic, but they were covered with money from the state budget, so the funds provided by CABEI are handled as a “reimbursement”.

Bukele’s government has promoted the initiative as a measure to eliminate the payment of commissions for sending remittances from the United States, which sustain the Salvadoran economy and which in 2020 totaled more than US$5.9 billion, according to data from the Central Bank.

According to a university survey, the adoption of bitcoin as a legal tender in El Salvador is seen as a poor or unwise decision by 77.5% of the population.

The Centro de Estudios Ciudadanos (CEC) of the Universidad Francisco Gavidia (UFG) survey indicates that 24% consider the decision as not very wise and 53.5% not at all-wise. In comparison, 12.9% say it is right and 6.5% very right.

El Salvador is the first country in the world to allow bitcoin as legal tender to circulate alongside the dollar, and the Bitcoin Law will enter into force next September 7.