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El Salvador has announced a new law that will place the task of crypto regulation in the hands of both state and private entities. The idea is that this entity will have control over any digital currency (except bitcoin, which has been declared legal tender in the country) and how it is issued within the Central American country’s borders.
El Salvador Is Climbing the Crypto Regulatory Ladder
The aim of the bill is to potentially attract outside investors and get them to put their money into the region’s economy and infrastructure. The law will also allegedly create new financial opportunities for current residents and companies that call El Salvador home.
Of the 84 seats in the El Salvador Congress, some 62 voted in favor of the law. The newly drafted bill reads as follows:
The purpose of this act is to establish a legal framework that provides legal certainty to transfer operations to any digital asset title used in a public publishing offering.
The new law also establishes a new body designed to monitor crypto activity. Known as the National Commission on Digital Assets and the Bitcoin Fund Administration Agency, the organization will be tasked with managing, safeguarding, and investing various funds from public offerings of digital currency organized by government officials.
This public offering can happen with almost any digital asset as long as it does not qualify as a central bank issued token from another region. In addition, they cannot enter bitcoins – which have been declared functional money by the state – or non-fungible tokens (NFTs).
El Salvador has made great strides over the last few years in the crypto arena. The country was the first to announce bitcoin legal tender, doing so in September 2021. This means that all businesses within its borders are required by law to accept bitcoins as a method of payment for goods and services. Until then, the country was heavily dependent on the USD to carry out its financial operations.
The process doesn’t come without its hiccups. The World Bank announced that they will not provide any assistance to the government of El Salvador as it works to implement its bitcoin agenda. The reason is because BTC and crypto are allegedly too volatile and speculative to be taken seriously.
Some Problems Thanks to BTC
Moreover, the country has faced protests from its own people, who do not like the idea of bitcoin being “forced” on them. Many residents are happy to use USD for purchases, and therefore do not see the need for bitcoins.
At the time of writing, El Salvador is in serious debt thanks to ongoing crypto buying. Despite the massive price drop experienced by the world’s number one form of digital currency, the country has vowed to buy at least one unit of BTC per day.
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