Key Takeaways
- El Salvador launches national bitcoin trust
- The trust is capped at $150 million and enables merchants to convert BTC to dollars instantly
- El Salvador is the first country to recognize bitcoin as a legal tender
The trust was approved by a legislative decision and will hold $150 million.
This development ensures the proper circulation of Bitcoin as a legal currency in the South American nation.
It is essential to know that the concept of trust in economics is a legal act in which one person hands over the ownership of assets to another to manage them for the benefit of a third party.
In this case, the Bitcoin trust will be made through state mechanisms and instantly convert Bitcoin into dollars, allowing local merchants to offset their exposure to Bitcoin.
According to a statement from the Minister of Finance in El Salvador Maria Breve, the initial allocation of $150 million could be increased in the future.
El Salvador made history in June when it became the first country to approve a bill that treats Bitcoin as a legal tender.
The bill is expected to be operational by September 7, and it will require businesses to accept Bitcoin payments.
However, these developments have not come without controversies with growing opposition within the country.
El Salvador President Nayib Bukele has defended the policy stating that a huge chunk of the population is willing to use Bitcoin due to its potentials.
He also alluded that the country was dependent on remittances, and bitcoin provides a cheap and fast way for cross-border transactions.
The financial sector in El Salvador has also taken up the task of implementing the new regulation.
There are already over 150 ATMs that can carry out operations in dollars and Bitcoin.
Do you think that more Latin American countries should follow the example of El Salvador in the adoption of Bitcoin?
