The Congress in El Salvador has passed a law under which $150 million will be used for crypto conversions. The main aim is to use the cryptocurrency as legal tender and convert it to US dollars. In the upcoming week, the country is set to adopt digital currency as a legal tender.
There 64 votes in favor of passing the bill, and only 14 votes against it. Consequently, Congress approved the fund. Considering that El Salvador already uses the US Dollar, it’s preparing to adopt the flagship crypto officially on September 7.
The finances for the crypto fund will come from the current budget of the finance ministry. According to lawmakers, the fund will be administered by BANDESAL, which is EL Salvador’s state development bank. A congressional document outlines the purpose of the document. It states that the law’s purpose is to support state-provided alternatives. It will eliminate prejudice to private initiatives so users can instantly and automatically convert Bitcoin to US Dollars.
Under the law, almost 50 consulting centers and 200 ATMs under the government’s digital wallet ‘Chivo,’ will be set up. They will be installed in various parts of El Salvador, from where users can withdraw and deposit. They’ll be able to do so without paying a commission. This is according to the statement by Nayib Bukele, El Salvador’s president, who began the initiative in June.
Chivo is the crypto wallet application that the president will be launching come September 7. Although employee pensions and salaries will still be paid in US dollars, Bitcoin will become a norm. The country’s other official currency is US Dollar, and under the upcoming law, businesses become obliged to accept either that or Bitcoin. In addition, holders can use Bitcoin or US Dollars to pay off their bank loans or taxes.
Approximately $75 million of the government’s fund will be used to put around $30 million of bitcoin into Chivo digital wallets. Such funding will cover the cost of seeding around $2.5 million users out of a 6.5 million population. To put things into perspective, $30 is a fraction of a complete Bitcoin currently. The president has said that it’s completely optional for consumers to use Bitcoin. And even those who want to hold bitcoin can do so in a wallet besides Chivo.
This is all part of Bukele’s plan of appealing to the tech-savvy population as a cool and modern 40-year-old president. He is of the opinion that giving citizens the option to use crypto is crucial. It will be the beginning of a brighter and wealthier future for the country. There is a benefit of this as well. Adopting bitcoin will reduce the fees involved in sending and receiving remittances.