Law making bitcoin legal currency in El Salvador comes into force (September 7)

RIO DE JANEIRO, BRAZIL – The law that allows the circulation of bitcoin as currency in El Salvador along with the US dollar comes into force this Tuesday, making this country the first in the world to take this step, amid its rejection by the population.

The Bitcoin Law, approved in June by the official majority in the Legislative Assembly and allies, indicates that “all economic agents must accept bitcoin as a form of payment when it is offered by whoever acquires a good or service.”

Read also: Check out our coverage on El Salvador

This means that its use is mandatory, although President Nayib Bukele has indicated that it will be at the option of Salvadorans.

In addition, the regulation states that “the exchange rate between the bitcoin and the United States dollar will be freely established by the market”.

As of Tuesday, Salvadorans will be able to use ATMs, where people who own bitcoin will withdraw dollars in cash.

Likewise, they can download the electronic wallet promoted by the Government and called “Chivo Wallet”.

People who decide to install the application on their cell phones will receive a bitcoin voucher equivalent to 30 dollars, which cannot be exchanged for dollars.

According to an explanation given by Bukele, the key between accepting and receiving bitcoin lies in the “automatic and instantaneous convertibility” of the crypto-asset to dollars.

The Salvadoran president has promoted bitcoin to eliminate the payment of commissions for sending remittances from the United States, which sustain the Salvadoran economy and benefit 1.63 million Salvadorans.

According to official sources, 471,633 Salvadoran households now receive these currencies, of which 13,530 are in extreme poverty, and 68,874 are in relative poverty.

According to the president, Salvadorans abroad pay US$400 million each year to send remittances, which in 2020 totaled more than US$5.9 billion.

However, according to the results of surveys, most Salvadorans show disinterest, rejection, and distrust of the use of bitcoin. Hundreds of Salvadorans, mostly young people, have demonstrated in recent days against the implementation of bitcoin as a currency and have called for the repeal of the law that will allow its use.

According to a survey of the Instituto Universitario de Opinión Pública de la Universidad Centroamericana (Iudop), 66.7% of the population thinks that the Bitcoin Law should be repealed, 78.3% of the citizens are little or not at all interested in downloading the electronic wallet application in their phones, and 71.2% prefer to use the dollar.

Two other surveys show similar results.

According to the Monetary Integration Law, the official currencies in El Salvador are the US dollar and the colón, although the latter is no longer in circulation.

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