El Salvador Legislative Assembly Approves Bitcoin Trust Act

The government of El Salvador is getting serious about using Bitcoin. (photo: executium/unsplash)

JAKARTA - The Legislative Assembly of El Salvador has passed a law creating a $150 million Bitcoin Trust. They also support the development of crypto infrastructure and services across the country. The bill passed on Tuesday, August 3 with 64 officials voting in favor and 14 against the creation of the trusteeship.

This trust is designed to facilitate the conversion of Bitcoin (BTC) into United States dollars and support the rollout of a vital technology infrastructure that enables widespread adoption of the crypto asset.

The news comes just one week before the country's controversial Bitcoin Act goes into effect. The upcoming law will recognize BTC as legal tender in El Salvador and is scheduled to take effect on Tuesday, August 31. Currently, the US dollar is also still used as legal tender in the country.

The El Salvador Development Bank (Bandesal) has been appointed to oversee the trust's operations.

A total of USD 150 million will be diverted from a state loan of USD 500 million from the Central American Bank for Economic Integration (CABEI). CABEI loans were initially taken for the purpose of economic recovery for small and medium enterprises.

Of the funds, USD 23.3 million was allocated to support the installation of government-backed crypto ATMs. These ATMs allow local residents to exchange between Bitcoin and USD. But USD 30 million has also been set to offer incentives to encourage the adoption of the government's digital wallet, Chivo.

In June, President Nayib Bukele announced that the government would send $30 worth of Bitcoin to every Salvadoran adult who downloaded the Chivo wallet. However, the current population of El Salvador is 6.5 million. This indicates that the government believes adoption will be lower or has not allocated enough Bitcoin for use.

In related news on Wednesday, asset tokenization and financial infrastructure company Koibanx announced it has signed a deal with the government of El Salvador to develop the country's digital currency infrastructure with the open-source Algorand blockchain at its core.

El Salvador's Bitcoin laws have come under some serious criticism and skepticism from international organizations and their own citizens.

Economy Minister María Luisa Hayém Brevé said the government is focused on cryptocurrency education and is using crypto incentives as a means to calm the high amount of uncertainty in its population.