El Salvador’s Legislative Assembly approves $150M Bitcoin Trust

El Salvador’s Legislative Assembly approves $150M Bitcoin Trust

El Salvador’s Legislature has approved legislation for creating a $150 million Bitcoin Trust to support the development of cryptocurrency infrastructure across the country. 

The Bill was passed on August 31, receiving 64 official signatures in favour and 14 against the trust. The Development Bank of El Salvador (Bandesal) has been entrusted with overseeing the Trust’s operation.

Out of the $150 million budget, $23.3 million is reserved for rolling out cryptocurrency ATMs and another $30 million to incentivize the use of the “Chivo” wallet. With cryptocurrency ATMs, citizens would be able to exchange between Bitcoin and USD. The budget is also committed to facilitating the conversion of Bitcoins into USD, and support vital technological infrastructure for easy adoption of crypto wallets. 

The budget amount of $150 million for the crypto infrastructure would be redirected from El Salvador’s $500 million loans with the Central American Bank for Economic Integration (CABEI) which was initially taken for economic recovery purposes of the country’s small and medium-sized enterprises.

Koibanx has also signed a deal with the El Salvador government to assist in developing digital currency infrastructure along with Algorand’s open-source blockchain at the core.

The news has come amid a controversial passage of Bitcoin Law where the legislation mandates. Bitcoins would replace USD as a legal tender across El Salvador starting September 7.

President Nayib Bukele had announced in June 2021 that the central government would airdrop $30 worth of Bitcoins to every Salvadoran adult who has downloaded the Chivo wallet. However, going by the country’s current population of 6.5 million, it is estimated that the government believes with such a circular that either adoption will be lower or there isn’t enough Bitcoin to move around.

The Bitcoin Law set to be implemented from September 7 has received severe criticism from international as well as national governments. María Luisa Hayém Brevé, the country’s Minister of Economy, iterated that the Salvadoran government is focusing on cryptocurrency education to use it as a means of incentive against the rising uncertainty among its citizens.