El Salvador became the first country in the world to adopt bitcoin as its legal tender on Tuesday, and it is said that it will reduce the cost of supply for the billions of dollars sent abroad. But critics have warned that it could fuel money laundering.
Led by the young, charismatic and popular President Nayib Bukele, the plan aims to allow Salvadoran savings of $ 400 million a year in remittance commissions, mostly from the United States.
Last year alone, remittances to El Salvador totaled nearly $ 6 billion, or 23% of its gross domestic product, one of the highest in the world.
Opinion polls suggest Salvadorians are wary of both bitcoin use and cryptocurrency volatility, which critics say could increase regulatory and financial risks for financial institutions. However, some residents are optimistic.
El Zonte is part of the so-called Bitcoin Beach which aims to make the city one of the first bitcoin economies in the world.
In anticipation of its release, the government has already installed an ATM of the Chivo digital wallet that will allow the cryptocurrency to be converted into dollars and withdrawn without commission, but Boukele on Monday eased public expectations for quick results and asked citizens to be patient.
On Monday, El Salvador bought the first 400 cryptocurrencies, temporarily pushing the price of bitcoin 1,49% higher (the exchange rate reached $ 52.680). Cryptocurrency is typically volatile. This spring, its price exceeded $ 64,000 in April and dropped to almost $ 30,000 in May.
Analysts fear that the move to legalize bitcoin alongside the US dollar could blur the prospect of El Salvador trying to seek a more than $ 1 billion financing deal with the International Monetary Fund (IMF).
Following the passage of Bouquet's law on bitcoin, the rating agency Moody's downgraded El Salvador's credit rating, while the country's bonds in dollars came under pressure.
