El Salvador Congress Approves a Law to Accumulate $150 Million in Bitcoin to Facilitate Crypto Transactions
El Salvador has approved a law to create a $150 million fund in order to facilitate conversions between Bitcoin and US dollars.
The $890 billion market cap cryptocurrency is trading just above $47,600 as of writing.
The country’s Congress approved the law ahead of officially adopting Bitcoin as legal tender next week.
El Salvador President Nayib Bukele first announced the plans to become the world’s first country to adopt Bitcoin as a legal tender alongside the USD in early June at the Bitcoin Conference 2021 in Miami. The bill was then sent to Congress, where it passed by a supermajority, 62 out of 84 votes, which was to come into effect on September 7.
On Tuesday, Congress approved the fund with 64 votes in favor and 14 votes against.
The $150 million for the new fund will be redirected from the finance ministry’s current budget and administered by the state development bank of El Salvador (BANDESAL).
“The purpose of this law is to financially support the alternatives that the state provides, without prejudice to private initiatives, that allow the user to carry out the automatic and instantaneous convertibility of bitcoin to the United States dollar,” a congressional document said.
Last week, as we reported, 200 ATMs and 50 consulting centers for the government's digital wallet app “Chivo” were installed in the country to enable users to deposit and withdraw money without paying commissions.
The Bitcoin revolution that started in El Salvador is also spreading to other countries in Central America. El Salvador’s neighboring country Honduras got its first crypto ATM opening just last week.
Up until now, there was no automated way to buy cryptos, and with this machine, the idea is to educate people about digital currencies through the first-hand experience.
This move comes after Dante Mossi, the executive president of El Salvador’s development bank CABEI said countries like Guatemala and Honduras have the most to gain if Bitcoin helps lower the cost of sending remittances.
Other central American countries are also eagerly waiting to see how El Salvador’s bitcoin adoption cuts the cost of remittances for them, he added.
Last year, Hondurans living abroad sent about 20% of the country's GDP, $5.7 billion in remittances.
Many software developers in the country are already paid in crypto, said Juan Mayen, chief executive of Honduran firm TGU Consulting Group which installed the machine, adding that it will also be a cheaper option to send remittances.
Elsewhere in the region, lawmakers are drafting bills in Panama to regulate the use of bitcoin and its status as a legal tender.
Additionally, Cuba is also all set to regulate cryptocurrencies’ use in commercial transactions by mid-September. The Central Bank of Cuba (BCC) said recently that it is drafting rules for the legal use of cryptocurrencies and to further issue licenses for crypto service providers, in part for “reasons of socio-economic interest.”
The Resolution has already been signed by its Minister-President Marta Sabina Wilson González. Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Tether (USDT) are the most commonly used crypto assets on the island, the bank said.
A virtual asset, according to the document, is the digital representation of value that can be “traded or transferred digitally and used for payments or investments.”