El Salvador continues to prepare for the implementation of the Bitcoin Law on September 7, while citizens' dissatisfaction continues.
With its own digital wallet and new technical standards recently published by the Central Bank of El Salvador, to facilitate and guarantee the proper use of Bitcoin (BTC), the government of El Salvador is ready to begin implementing the cryptocurrency within its financial system within a few days. However, a significant portion of the country's citizens remain dissatisfied with the use of this digital asset.
The Latin American country has seen growing resistance to the implementation of bitcoin as legal tender since its president Nayib Bukele announced the Bitcoin Law in June and the Assembly approved it a few days later. The World Bank and the International Monetary Fund are some of the international entities that have warned about the possible risks that bitcoin could bring to El Salvador's economy, while surveys indicate that at least half of the population does not agree with using bitcoin as a means of exchange or, failing that, they do not know what the cryptocurrency is or how it works.
Still, the government of El Salvador continues with its plans to make the Latin American country the first nation in the world to officially adopt Bitcoin as legal tender.
Recently, the Central Reserve Bank of El Salvador published two documents, submitted for consultation, to establish the technical standards necessary to facilitate the application of the Bitcoin Law and the lineamientos for the authorization of the operation of the Chivo digital wallet platform promoted by the State for the use of bitcoins and dollars. In addition, the country's Minister of Finance, Alejandro Zelaya, recalled that the use of both, the cryptocurrency and the digital wallet, are completely optional for both the population and companies that do not want to operate with the cryptocurrency.
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Technical standards and guidelines
The documents published by the Central Reserve Bank of El Salvador indicate, first of all, that the entry into force of the Bitcoin Law in the country will allow the use of the cryptocurrency as legal tender at the national level. It also indicates that in order to provide optimal services with this new form of digital money, the country will allow the entry of different economic agents in order to facilitate agile, competitive and inclusive products and services for the general population.
Preventing money laundering risks
On the other hand, article 2 of the technical standards states that public and government entities, such as banks, cooperative banks and savings and credit societies, that want to participate in crypto to fiat exchange operations, or vice versa, between bitcoin and the dollar through providers of Wallets, exchanges, payment service providers and any other agent within the value chain, will be subject to compliance with the provisions established in the Law Against Money Laundering and Assets and its Regulations, in addition to other regulations and instructions related to the matter.
The Central Bank establishes that bitcoin service providers must establish a Committee for the Prevention of Money and Asset Laundering, which evaluates and controls possible risks and financial crimes as well as other illegal activities, such as the financing of organizational terrorism and the proliferation of weapons of mass destruction.
Informs presentation
The rules also ask entities Competently report unusual or suspicious transactions to the authorities of users that the authorities must monitor. It also points out that they must Report transactions with a value equal to or greater than US$1.000 to the authorities, along with the name of the sender and the receiver, the account details and the financial institution of both parties. In fact, the rules ask the obliged subjects to Implement a detailed KYC (Know Your Customer) record of your customers, with real names and pseudonyms, physical addresses, amounts involved in the transactions, time and date of each operation, as well as the data of the counterparty that receives the transaction in bitcoin, among other requirements (Article 51 of the Technical Standards).
Obligated entities must also comply with the requirements of FATF Recommendation No. 16, which requires “obtaining, retaining and transmitting” information from parties involved in Bitcoin transactions to identify and report suspicious activities, in order to take immediate action such as freezing funds or prohibiting transactions with specific persons and entities.
On Bitcoin's volatility and immutability
Additionally, the technical standards establish that cryptocurrency service providers must inform users in advance about la Bitcoin volatility, immutability of transactions, cybersecurity risks, among others.
Completely optional use of Bitcoin
Alejandro Zelaya, Minister of Finance of El Salvador, declared that the population is not obliged to use bitcoin as a currency of exchange and that companies that do not want to operate with the cryptocurrency will not be sanctioned; this was stated by Minister Zelaya during a interview in the program Face to Face, also remembering that the US dollar will continue to be the main reference currency in the country after the implementation of bitcoin.
Continue reading: El Salvador finds resistance to the Bitcoin Law but Bukele trusts in the “new money of the 21st century”
