El Salvador's President Nayib Bukele addresses the nation about his bitcoin legal tender plan on June 24, 2021.
  • El Salvador is planning to give around R400 in bitcoin to citizens who download the government's crypto app, Chivo.
  • The initiative comes as the much-anticipated "Bitcoin Law" takes effect on September 7.
  • President Nayib Bukele in a national address explained how the landscape would look like for 6.5 million Salvadorans.
  • For more stories go to www.BusinessInsider.co.za.

    El Salvador is planning to give the equivalent of some R400 in bitcoin to citizens who download the government's cryptocurrency app, Chivo, CoinDesk reported citing a local news outlet.

    The initiative comes as the "Bitcoin Law" takes effect on September 7, making the Central American country the first in the world to accept bitcoin as legal tender, alongside the US dollar.

    For over an hour on Thursday, President Nayib Bukele in a national address explained how the landscape would look like for 6.5 million Salvadorans once the law goes into effect.

    For instance, bitcoin received as payment can be immediately converted to dollars.

    "The use of bitcoin will be optional, nobody will receive bitcoin if they don't want it," Bukele said, according to Reuters. "If someone receives a payment in bitcoin they can choose to automatically receive it in dollars."

    The 39-year-old president added that salaries and pensions will continue to be paid in US dollars, but did not go into details on whether the law would affect only state workers or include private sector employees, Reuters reported.

    Ever since the Bitcoin Law was approved in June by a supermajority - garnering 62 out of 84 votes - it has been met with been met with some opposition.

    The International Monetary Fund has expressed concerns over El Salvador's historic move, saying it raises a number of "macroeconomic, financial, and legal issues that require very careful analysis."

    Still, the millennial leader stands by his advocacy for the world's largest cryptocurrency by market capitalisation.

    "One of the reasons we passed the bitcoin law is precisely to help people who send remittances," Bukele said, according to Reuters.

    El Salvador is among the countries that rely heavily on money sent back from workers abroad.

    World Bank data reveal that remittances to the country made up nearly 20% of its gross domestic product in 2019 - ranking among the highest in the world.

    Bukele has also cited financial inclusion and economic growth as reasons for adopting bitcoin, given that 70% of citizens are unable to access "traditional financial services."

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