Three months after the initial announcement, El Salvador has become the first country to formally accept bitcoin as legal tender. The resolution to make this change was passed by a vote of 62-12 back in June.
“The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out,” an excerpt of the resolution reads, according to CNBC.
Since the nation’s congress passed the bill, El Salvador has purchased more than $20 million worth of bitcoin. President Nayib Bukele says the nation’s government will continue to find its way into cryptocurrency as it diversifies its balance sheet.
“Our brokers will be buying a lot more,” Bukele tweeted on September 6.
In addition, the nation’s government has created a digital wallet called Chivo that manages the use of bitcoin. Everyone that signs up will receive $30 worth of bitcoin. Also, Lawmakers have passed a $150 million measure to help convert bitcoin into U.S. dollars.
Despite efforts from the government to incorporate the use of bitcoin, Central American University has found that nearly 70% of Salvadorans disapprove of the use of bitcoin as legal tender. Researchers at Central American University also note that many of the people surveyed are unsure of how they would use bitcoin. In a nation where many people do not have access to traditional banking services, there are clear divides as to who will be able to use this service. Not to mention, financial experts have serious questions about the volatility of bitcoin as legal tender.
“Bitcoin isn’t really designed to be a means of exchange so this is an early experiment for the currency,” Chainalysis Chief Economist Phillip Gladwell told CNBC.
“I think the main use in El Salvador is really going to be around remittances and people using it to save some wealth and really perhaps just to be some competition to the dollar in the country.”