El Salvador’s adoption of Bitcoin (BTC) as legal tender has been widely celebrated across the crypto ecosystem, but one expert believes the importance of the rollout was a little bit exaggerated.
Speaking to CNBC, Fidelity Investments director Jurrien Timmer said that the significance of El Salvador’s Bitcoin move is “a little bit overplayed.”
“Because it’s not like El Salvador has dropped the U.S. dollar as its peg,” Timmer explained. “It’s not like it switched from dollars as its currency peg to Bitcoin.”
Reminding that the country still has the United States dollar and people can decide to be paid in dollars or pay in dollars, he added that the adoption is on a voluntary basis. However, while paying in Bitcoin is voluntary in El Salvador, local merchants in the country are mandated to accept and process BTC transactions.
Timmer noted that Bitcoin is being tested, for the first time, as a medium of exchange as opposed to a store of value. Listing its scarcity and its powerful network as the core values of Bitcoin, he stressed that the proof-of-work makes Bitcoin, by definition, less scalable than other cryptocurrencies like Ether (ETH).
Bitso, a major cryptocurrency exchange in Latin America, will be the core crypto service provider for El Salvador’s official Bitcoin (BTC) wallet, known as Chivo.
In conjunction with Bitcoin becoming legal tender in El Salvador, Bitso announced on Tuesday that the firm would assist El Salvador in launching the state-supported BTC wallet alongside companies like Silvergate Bank, digital currency company Athena Bitcoin and blockchain firm Algorand.
Silvergate Bank, a California state-chartered commercial bank and a United States Federal Reserve member, will work with Bitso to facilitate U.S. dollar transactions for the Chivo wallet. Athena Bitcoin will provide some front-end services and Chivo’s ATM-related operations, while Algorand will act as the official blockchain provider.
Launched Tuesday, the state-issued Chivo wallet is designed to enable individuals and businesses to send payments in Bitcoin or dollars from anywhere in the world. The wallet is available on Android and iOS, allowing users to automatically convert Bitcoin transactions into dollars or keep their Bitcoin holdings and later withdraw them in cash from 200 Bitcoin ATMs installed across the country.
A spokesperson for Bitso told Cointelegraph that Chivo users will not have to pay fees related to the network, noting that “none of the withdrawals, deposits or other transactions” made with the Chivo app would generate fees for users, elaborating:
“The Salvadoran government has created strategic partnerships to ensure that convertibility is undergone at the most competitive prices possible, and users will not have to be faced with covering any costs.”
As Russian cryptocurrency advocates are working to attract global crypto mining operators, local lawmakers have gotten more serious about regulating the industry.
Anatoly Aksakov, chairman of the Russian State Duma Committee on Financial Markets, claimed that Russian lawmakers are now considering recognizing the crypto mining industry as a form of entrepreneurship under local business laws, TASS news agency reported on Wednesday.
“As this [crypto mining] is a type of entrepreneurial activity, it is obviously necessary to include it into the state register, to regulate it as a type of entrepreneurship under an appropriate code, and impose relevant taxation,” Aksakov said.
He said that the government is actively working on several legal initiatives related to the crypto industry, expecting to move forward with bills for crypto taxation, mining and digital currency issuance in the near future. Aksakov also stressed the need to provide more regulatory clarity for digital currencies, stating:
“We still need to discuss what digital currency actually is, although we call it currency, it is rather used as a financial instrument, or a financial asset that is a subject to investment, rather than a means of payment.”
This Daily Dose was brought to you by Cointelegraph.