El Salvador’s legislature has passed a bill that allows for the creation of a $150 million Bitcoin Trust. A report revealed this news earlier today, noting that this trust will underpin the development of the country’s crypto infrastructure and services. Reportedly, the legislative assembly passed this bill on August 31.
According to the report, 64 lawmakers voted in favour of creating the trust, while 14 objected. Through the trust, El Salvador will be able to convert BTC into US dollars. Additionally, the trust will facilitate the development of vital technological infrastructure to facilitate rapid crypto adoption.
The Development Bank of El Salvador (BANDESAL) will be responsible for overseeing the trust. The country will get the $150 million from the $500 million loans it had secured from the Central American Bank for Economic Integration (CABEI). Initially, these funds were meant to stimulate economic recovery for small and medium-sized enterprises (SMEs).
Out of the $150 million, El Salvador intends to use $23.3 million to set up government-backed ATMs. The government also seeks to set $30 million aside to incentivize citizens to embrace its digital wallet dubbed Chivo.
Rushing to implement BTC as legal tender despite mounting resistance
This news comes as El Salvador inches closer to making BTC legal tender on September 7. While President Nayib Bukele promised to offer every citizen $30 worth of BTC if they embrace Chivo, the $30 million earmarked for this initiative will not suffice.
At the moment, the country has a population of 6.5 million. This suggests that the government believes that adoption will be low initially. Alternatively, the current allocation might mean there isn’t enough BTC to go around.
Although El Salvador has made headlines with its decision to embrace BTC, its decision has not sat right with all its citizens. For instance, retirees and veterans are worried that the government will start paying their pensions in BTC instead of the US dollar. As a result, they marched through San Salvador on August 27, voicing concerns over BTC’s volatility.
Apart from the growing resistance within its borders, El Salvador’s decision to embrace BTC as legal tender has also been bashed by international organizations. An example is the IMF, which said such a move threatens macroeconomic stability. While the intergovernmental financial body did not specifically mention El Salvador, it said embracing BTC to such an extent is a step too far. The World Bank also disapproves of the country’s decision to make BTC legal tender.
