El Salvador’s President, Nayib Bukele has stated that the use of Bitcoin as legal tender in the country will take effect on September 7.
In his national address, Bukele maintained that Bitcoin’s use as fiat will be optional alongside the US dollar.
The use of Bitcoin will be optional, nobody will receive Bitcoin if they don’t want it… If someone receives a payment in Bitcoin they can choose to automatically receive it in dollars.
Nayib Bukele, President of El Salvador
The new development comes after one of El Salvador’s major opposition parties, Farabundo Martí National Liberation Front filed a lawsuit against the adoption of the crypto as the country’s legal tender. Apparently, this has not weakened the sitting government’s stance.
The government also announced it will be hosting a Bitcoin airdrop. As such, it will be giving its adult citizens $30 worth of Bitcoin. This will make the Central American country the first in the world to do that according to Binance.
Salvadoran adults can qualify for this $30 reward by downloading a Bitcoin wallet. The government hopes this would serve as enough incentive for its people to at least give Bitcoin a try.
Bitcoin’s adoption as fiat currency in El Salvador is aimed at boosting remittance in-flows into the Central American country.
El Salvador is one of the world’s most remittance-dependent economies, with diaspora remittances accounting for about 20% ($6 billion) of GDP in 2019, according to World Bank data. Bitcoin offers a much cheaper and quicker means for remittances compared to traditional channels.
Despite seeing a request for technical help rejected by the World Bank, El Salvador is going ahead to implement and regulate the use of the flagship crypto.
Recall that El Salvador became the first country to adopt the crypto as legal tender after its legislature voted in Bukele’s proposal to embrace the cryptocurrency on June 9.
With a definite date now set for Bitcoin’s mainstream adoption, Bukele says workers’ salaries and pensions will continue to be paid in US dollars.
The president’s disclosure follows a recent poll by the Chamber of Commerce and Industry of El Salvador which showed that 8 in 10 people oppose receiving salary payments in Bitcoin. Of the 1,600 responders, 43% identified as entrepreneurs while 57% classed themselves as non-entrepreneurs.
Meanwhile, US-based Athena Bitcoin has revealed plans to invest over $1 million to install 1,500 cryptocurrency ATMs in El Salvador, particularly in areas with the majority of remittance recipients.
These ATMs will allow users to trade Bitcoins for cash and vice versa, according to Athena Bitcoin.
Analysts project that cryptocurrency will gradually account for a bigger share of the over $500 billion in global annual remittances.
On the whole, El Salvador’s dogged push to officially deploy Bitcoin transactions in the face of regulatory and environmental concerns could help incentivise crypto investments. More still, its probable success might spur other countries into taking similar action.
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