Apparently, the government of El Salvador is planning to make the country a haven for crypto fans. It has already become the world’s first sovereign nation to adopt bitcoin as legal tender. Not long ago, President Nayib Bukele announced the country’s partnership with digital wallet company, Strike, to create the country’s modern financial infrastructure using BTC technology. For achieving this purpose, the government offered quite a crazy idea: to distribute cryptocurrency to the population.
The authorities have promised to give $30 worth of bitcoin to each resident of the country who signs up for a digital wallet -Chivo. After that, they can pay with bitcoins for goods whose prices are indicated in dollars. With the help of this initiative, the government plans to attract investment in the country. Besides, the mass use of BTC should be a positive signal for investors to boost uptake and reduce the costs of money transfers for millions of residents who work abroad.
"Why create this law? Because Bitcoin has a $600 billion market capitalization globally and if we do this, investors and tourists who own Bitcoin will come to the country and benefit Salvadorans and the economy," Bukele said. Notably, after the recognition of bitcoin as a means of payment, El Salvador faced strong opposition from the World Bank. It categorically refused to promote the spread of bitcoin. In addition, the International Monetary Fund (IMF) also received this news without much joy, which is sure to experience "macroeconomic, financial and legal problems" in connection with the transition of El Salvador to bitcoin.
"A rushed implementation of the new alternative payment system platform will affect financial institutions’ management framework for operational, cyber/ransomware, currency and liquidity risks," Fitch analysts stressed.
