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The President of El Salvador, Nayib Bukele (Nayib Bukele) provides any citizen who has registered a digital wallet with $30 worth of Bitcoin.
The President of El Salvador, Nayib Bukele, redoubled his support for the country’s new law to make Bitcoin a legal tender, and provides any citizen with a digital wallet with $30 worth of cryptocurrency.
Bukele said in a national speech on Thursday night that the government will create its own Bitcoin wallet Chivo, which is “cool” slang in El Salvador. He said the funds will be deposited into the account of any citizen who downloads it and uses their phone number and ID number to register as a user.
He said that the law that makes Bitcoin legal tender will take effect on September 7.
The 39-year-old Bukele reiterated his view that the use of cryptocurrency will help attract investment, boost consumption, and reduce the cost of remittances for millions of Salvadorans working abroad. But he said that bank accounts in U.S. dollars will still be U.S. dollars, and salary and pension payments will continue to be paid in U.S. dollars.
“Why is this law enacted? Because Bitcoin has a global market value of 600 billion U.S. dollars, if we do, investors and tourists who own Bitcoin will come to the country and benefit Salvadorans and the economy,” Bukele said.
President Nayib Bukele of El Salvador said in a national speech on Thursday that the government will create its own Bitcoin wallet Chivo, which is “cool” slang in El Salvador. [File: Bloomberg]
Consumers can use bitcoins in their wallets to pay merchants for goods denominated in U.S. dollars. But according to Bukele, if business owners want to receive payments in U.S. dollars, they can press a button in the Chivo app to instantly convert Bitcoin to U.S. dollars. “This will be completely optional. The U.S. dollar will continue to be legal tender,” he said.
Bukele said that Chivo Wallet will be available for download in September and it will be compatible with other Bitcoin wallets.
He said that the government will provide companies with training on bitcoin transactions and seek to increase the penetration rate of the Internet and mobile phones to encourage the use of this cryptocurrency. He added that companies technically unable to receive electronic payments will be excluded from the law.
Risk potential
Not everyone is as enthusiastic about the plan as Booker. Fitch Ratings stated in a report on Thursday that legislation that makes Bitcoin legal tender will increase the regulatory risks of financial institutions, including the possibility of violating international anti-money laundering and terrorist financing standards.
“The hasty implementation of the new alternative payment system platform will affect the operations of financial institutions, network/ransomware, currency and liquidity risk management frameworks,” Fitch analysts including Rolando Martinez wrote.
The International Monetary Fund also criticized the move, and the World Bank rejected the government’s request for assistance in the implementation of Bitcoin.
According to data compiled by Bloomberg, at 10:11 am New York time, Bitcoin fell 4.4% to $33,338.
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