The government of El Salvador has taken the road less travelled in terms of its financial management. The native currency of the region was replaced by USD 20 years ago due to the increased burden of inflation. However, the current president of the South American nation Nayib Bukele has decided to accept Bitcoin as another acceptable legal tender in the region.
The move has sparked an international debate on the matter, and the country is also facing internal and external pushback on the matter. Addressing the NFP, Bukele recently claimed that the government has decided to not implement any taxes on the revenue generated by Bitcoin. As per financial experts, this is an attempt to encourage foreign investors to channel their crypto investments in the region.
IMF Has Reservations
Javier Argueta is the legal advisor to the president of El Salvador. He was speaking to the AFP or the Administradora de Fondos de Pensiones when he revealed that the foreign investors would be exempted from any type of capital gains taxes on Bitcoin. He further added that the country is trying to establish a dialogue with different international agencies for the execution of the latest crypto compliance measures.
According to Argueta, International Monetary Fund (IMF) has also expressed severe reservations on the matter of Bitcoin acceptance. He pointed out that many other international collaborators have also shared their concerns over the lack of traceability, infrastructure, and the threat of illegal financial. However, he concluded that the government of El Salvador did not back down from its new cryptocurrency goals.
The business community of El Salvador has not been fully aligned with the new Bitcoin-related plans of the country. There have been several protests against the acceptance of Bitcoin as a legal tender. One of the major causes of concern for the people is the high amount of volatility tied to Bitcoin. The business community claims that employers can face difficulties in the issuance of a paycheck due to this factor. It is going to take 12 months to fully comprehend the impact of Bitcoin on the development of the local economy. To make the process of Bitcoin adoption smoother, the government has issued an official wallet called Chivo. Every new user gets $30 worth of Bitcoin for free. There have been no reported technical issues with the Chivo wallet; however, the Bitcoin ATMs have experienced some hiccups. One of the citizens has also filed a lawsuit against the government of El Salvador.