The political situation in El Salvador is heating up as hundreds of Salvadoreans protest the passing of the Bitcoin Law, which will make BTC a mandatory legal tender. The law takes effect on September 7 and prescribes that all citizens and economic agents accept BTC and the US Dollar as joint means of payment.
Demonstrations against the proposed law are taking place in the streets of El Salvador. Among the organising groups are workers, veterans and pensioners in their hundreds, all raising their voices in protest.
Last month, a group of university students, activists and unions gathered in front of Congress in capital San Salvador to demand the derogation of the Bitcoin Law, saying it only facilitates money laundering and corruption. Representatives of the group introduced a written statement arguing that bitcoin’s decentralisation could do more harm than good:
Bitcoin would facilitate public corruption and the operations of drug, arms and human traffickers, extortionists and tax evaders. It would also cause monetary chaos, hit people’s salaries, pensions and savings, ruin many MSMEs, affect peasant families and hit the middle strata.
Protest group statement
El Salvador is known for being an authoritarian country with non-transparent policies, and according to Salvadoreans the mandatory use of bitcoin will only encourage the government’s corrupt operations.
Cargo Carriers Threaten to Impose 20% Freight Levy
The Salvadorean Association of International Cargo Carriers (ASTIC) has demanded the modification of article 7 of the Bitcoin Law that stipulates the mandatory acceptance of bitcoin. It has threatened to introduce a 20 percent levy on customers paying for freight with BTC to protect itself from the currency’s volatility.
In an official statement, ASTIC argued:
No Central American carrier contracted by an economic entity in El Salvador will accept bitcoin as a form of payment, creating divisionism in the sector for paying the foreigner in [US] dollars and the national for being obliged with the cryptocurrency.
ASTIC statement
Neighbouring Countries Are Watching and Waiting
While Salvadoreans fill the streets to make their voices heard, neighbouring Central American countries are waiting to see how the situation develops once the Bitcoin Law is passed. If it succeeds, El Salvador could save substantial costs of remittances, besides facilitating financial inclusion for the unbanked – something that could also benefit neighbouring countries such as Guatemala and Honduras.
Stanley Quinteros, a member of El Salvador’s Supreme Court of Justice workers’ union, predicted that the mandatory adoption of bitcoin would damage Salvadorean finances as there is no way to control or stabilise prices.
We know this coin fluctuates drastically. Its value changes from one second to another and we will have no control over it. Everyone is watching if it goes well for El Salvador and if, for example, the cost of remittances drops substantially … other countries will probably seek that advantage and adopt it.
Stanley Quinteros, El Salvador’s Supreme Court of Justice workers’ union
In anticipation of the Bitcoin Law’s passing, in June El Salvador launched 1,000 Bitcoin ATMs installed by Athena Bitcoin for the purchase and sale of BTC.
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