El Salvador’s Legislative Assembly yesterday passed legislation to allow for the creation of a $150 million Bitcoin Trust which indicates support for the development of crypto infrastructure and services across the country.
The bill was passed yesterday with 64 officials voting in favour and 14 opposing the trust’s creation. The Trust is designed to facilitate the conversion of Bitcoin into U.S. Dollars and support the rollout of vital technological infrastructure enabling widespread adoption of crypto assets.
The vote comes just one week before the country’s adoption of Bitcoin as a legal tender takes effect. The impending legislation will recognize Bitcoin as legal tender across El Salvador and is slated to take effect on the 7th of September. Currently, U.S. dollars are used as legal tender in the country.
The Development Bank of El Salvador (Bandesal) has been appointed to oversee the trust’s operation. The $150 million will be redirected from the country’s $500 million loan with the Central American Bank for Economic Integration (CABEI). The CABEI loan was originally taken for the purpose of economic recovery for small and medium-sized businesses.
From the loan collected, $23.3 million is earmarked to support the installation of government-backed crypto ATMs, allowing local citizens to exchange between Bitcoin and USD. $30 million has also been designated to offer incentives to encourage the adoption of the Government’s digital wallet named Chivo.
As previously reported by Nairametrics, President Nayib Bukele announced the government would airdrop $30 worth of Bitcoin to every adult Salvadoran adult who downloads the Chivo wallet. El Salvador’s current population is about 4 million which means a total of $120 million worth of Bitcoin will be purchased by the El Salvadorian government.
Today, asset tokenization and financial infrastructure company Koibanx announced it had signed a deal with the government of El Salvador to develop the country’s digital currency infrastructure with Algorand’s open-source blockchain at the core.
El Salvador’s Bitcoin Law has been met with some serious criticism and skepticism from international organizations and its own citizenry.
Minister of Economy, María Luisa Hayém Brevé said the government was focused on cryptocurrency education and using crypto incentives as a means to soothe the high amount of uncertainty within its population.
The International Monetary Fund (IMF), released a blog post titled ‘Cryptoassets as National Currency? A Step Too Far,’ criticizing the use of crypto assets like Bitcoin as a legal tender. Although the article did not mention El Salvador directly, many analysts in the crypto community believe the article was written to criticize El Salvador’s decision of making Bitcoin a legal tender. The President of El Salvador responded on Twitter to the IMF article with a crying emoji.