In what will likely be a relief for many Salvadorans, El Salvador’s finance minister said the use of BTC will remain “totally optional” and businesses will not be sanctioned for not using it when the country’s controversial BTC law comes into effect on Sept. 7, reports Yahoo News.
Fast facts
- The country’s adoption of BTC as legal tender has faced strong internal opposition since the law was passed in early June, as activists took to the steps of the country’s National Assembly in July to protest the move. According to a poll released around the same time, less than 20% of Salvadorans support the move, with nearly 65% of respondents saying they would not be open to having their salaries paid in BTC.
- The article cited a recent television interview with the country’s finance minister, Alejandro Zelaya, in which he explained the US dollar will remain the primary currency of the country for use by government and business for their accounting.
- Zelaya’s comments contradict the wording of the bill legislating the adoption however, which stipulated businesses and governments must accept BTC as payment for goods and services, as well as taxes and any fines. Though pressed for clarification on this point, Zelaya did not elaborate.
- This news comes only days after a scathing assessment from credit rating agency Fitch Ratings, which said the adoption will severely impact the credit rating of the country’s insurance sector. Fitch explained holding BTC will increase the already significant risk the sector is exposed to because of the cryptocurrency’s notorious price volatility, but if insurers were to sell it immediately they would incur additional operating costs which could be better spent elsewhere. Fitch followed competitor ratings service Moody’s, which made a similar assessment only last month.
- Also criticizing the move were global financial organizations such as the International Monetary Fund, which issued a thinly veiled warning for any other countries looking to follow El Salvador’s lead. In a report published in July, the IMF called adopting BTC an “inadvisable shortcut” to strengthening the economy through steady integration of new digital technologies, saying crypto threatened to destabilize an economy further.