Chivo Implements Measures “Against Money Laundering,” El Salvador’s Largest Bank Accepts Bitcoin Payments
There is also “no tax” - income or capital - on profits from Bitcoin investment in the country in order to “encourage foreign investment,”
Bancoagrícola, the largest bank in El Salvador, will be allowing its customers to pay their credit card bills and loans in Bitcoin. The cryptocurrency can also be used to purchase goods and services from the bank’s merchant network.
Founded in 1955, Bancoagrícola is partnering with New York-based payment network Flex to enable the payments in BTC via its mobile app.
Flexa announced that the bank's customers will be able to pay US dollar-denominated loans and credit card balances with BTC at “the exact fair market rate, without any additional fee or spread.”
Bancoagrícola merchants that are accepting payments through the bank’s Wompi payment gateway can also make use of Flexa-powered bitcoin payments.
Earlier last week, El Salvador became the world’s first nation to adopt Bitcoin as legal tender alongside the US dollar. The adoption also saw multinational chains like McDonald’s and Starbucks accepting BTC as a form of payment.
Adopting Bitcoin also means the nation won’t be levying any tax on cryptocurrency investment.
“If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment,” Javier Argueta, legal adviser to President Nayib Bukele, told AFP.
“There will be no taxes to pay on either the capital increase or the income.”
As for the fears over the potential for Bitcoin’s illegal use, Argueta said the wallet called “Chivo” allows Salvadorans at home and abroad to buy and spend the cryptocurrency as implemented “relevant mechanisms” to ensure traceability.
“We are implementing a series of recommendations from international institutions against money laundering,” said the adviser adding, transactions would be halted temporarily if the value were to collapse to minimize the impact of extreme currency fluctuation.