El Salvador’s Legislative Assembly Approves Key $150M Bitcoin Trust
For El Salvador’s Bitcoin Law to function as planned, a Bitcoin trust fund is crucial. The country’s government will handle the exchange between dollars and bitcoins. They’ll assume the volatility and guarantee prices. And now, less than a week before the law goes into effect, the Finance Commission of the Legislative Assembly confirmed the creation of a $150M Bitcoin trust. Just in time.
Related Reading | El Salvador’s Central Bank Issues Guidelines For Banks, Raises Questions
Salvadoran newspaper El Diario de Hoy quoted María Luisa Hayém Brevé, the Minister of Economy:
“We have several teams in the territory to show the population how to use the Chivo Wallet. We have developed a friendly application for all Salvadorans to be able to learn how to use this cryptocurrency.”
About the Bitcoin trust fund itself, a couple of months ago when President Bukele explained the Bitcoin Law to us, Bitcoinist told you:
“El Salvador will have a trust fund dedicated to these currency exchanges. They’ll buy the Bitcoin from those who choose to receive Dollars, and they’ll protect their earnings from possible volatility in Bitcoin’s price. If the vendor does a transaction for $5, that’s exactly what he or she’s going to get.
According to President Bukele, El Salvador’s Bitcoin law “gives full freedom to the seller, but also gives full freedom to the buyer.”
Where Does The Money For The Bitcoin Trust Fund Come From?
The Central American Bank for Economic Integration (CABEI) gave El Salvador a $500M loan. From those funds:
$150M will become the Bitcoin Trust
$53.3M is the budget for the plan’s execution. From those, $23.3M are for the Puntos Chivo cashpoint kiosks and the Chivo ATMs.
$30M for the $30 bonus each Salvadoran who uses the government’s Chivo Wallet will get.
Estamos construyendo 50 puntos Chivo distribuidos por todo nuestro país 🇸🇻
En ellos se podrá depositar y retirar dinero (sin comisiones) y habrá personas listas para asesorar en cómo descargar y utilizar la billetera electrónica y los cajeros.@chivowallet #Bitcoin #PuntosChivo pic.twitter.com/unT8rOTR7f
— Nayib Bukele 🇸🇻 (@nayibbukele) August 31, 2021
In recent a report about the Central American Bank for Economic Integration’s level of involvement in the implementation of the Bitcoin Law, Bitcoinist commented:
“The Central American Bank for Economic Integration seems to be one of the most bullish institutions in this whole scenario. Mossi thinks that “Guatemala, Honduras and El Salvador are the countries that would have the most to gain if the adoption of bitcoin lowered the cost of sending remittances.” All countries in his organization’s area of influence.”
BTC price chart on Bitbay | Source: BTC/USD on TradingView.com
How Will El Salvador’s Government Guarantee No-Fee Transactions?
Last week, using a tweetstorm, President Bukele clarified some of the many doubts that this groundbreaking project creates. Among other things, Bukele claimed:
With the app, they’ll be able to receive or get paid in BTC and in Dollars. Without any fees.
Salvadoreans abroad will be able to send to their families remittances in BTC or in Dollars, again without any fee.
People can immediately exchange all of the BTC they get into Dollars. They can then leave it on the wallet or extract cash in the already mentioned 200 ATMs and 50 cash points.
Related Reading | President Bukele Clears Up Misconceptions About The Government’s Chivo Wallet
How will they do it? They’ll use the recently approved $150M Bitcoin trust fund, that’s how. The government will assume Bitcoin volatility’s risk, but it will also reap the rewards that said risk entails. While the opposition worries about President Bukele’s ability to guarantee dollar liquidity, they miss the bigger picture. El Salvador’s government now holds bitcoin in its balance sheet. They have exposure to the hardest money ever created.
Less than a week to go before the Bitcoin Law goes live. Grab your seats.
Featured Image by Wesley Tingey on Unsplash – Charts by TradingView
