Huobi Obsrvation
The Central Bank of El Salvador issued two drafts on 17 August. The first, titled “Guidelines for the Authorization of Operation of the Digital Wallet Platform for Bitcoin and Dollars”, defines BTC as legal tender and will see the country formally adopt the digital asset on September 7. The second document titled “Technical Standards to Facilitate the Application of the Bitcoin Law”, points out a number of compliance details.
Huobi Study Club notes that there are no regulations yet on accounting standards or exchange rates for converting Bitcoin to fiat currency or converting fiat currency to cryptocurrency.
Public information indicates that the US dollar will remain the country's primary currency and will also remain the primary currency used by businesses, governments and all others for their operations. The use of Bitcoin and digital wallets will be "completely optional" and businesses that do not accept cryptocurrencies will not be sanctioned.
Earlier, a crowd of left wing trade unions, student associations and other organizations gathered in the legislative assembly in El Salvador to demand the withdrawal of the so-called Bitcoin law. Surveys show that around 77% of the country's population rejects the Bitcoin law.
According to Huobi Study Club, making Bitcoin as fiat currency could reduce the cost of remittances in El Salvador, which account for nearly a quarter of the country's GDP. Another advantage would be the ability to offer banking services to the unbanked, for nearly 70% of El Salvador's citizens currently unable to access a bank account. In addition, El Salvador may attract more investment in cryptocurrencies.
Huobi Study Club has repeatedly maintained the view that Bitcoin is unsuitable as a payment circulation tool due to the efficiency of transfers and the volatility of market prices. Objectively, it is difficult for El Salvador to introduce Bitcoin as fiat currency and reach to the ground.
However, the official adoption of BTC as El Salvador's fiat currency on 7 September will be a major factor in boosting the cryptocurrency market in the near future.
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