El Salvador ´s Crypto Ecosystem and next steps to implement
“The journey of a thousand miles begins with one step.” Lao Tzu.
On Wednesday, June 9, El Salvador published in its Official Gazette a historic event worldwide, the first law in the world that provided a digital asset, specifically the bitcoin with unrestricted and unlimited clearance power in any transactions that natural persons, public or private legal entities carry out in any capacity, therefore, bitcoin became a legal tender in El Salvador. Bitcoin Law jointly with the Law for the Creation of the Bitcoin Trust, the Regulation of the Bitcoin Law, the Technical Standards to Facilitate the Participation of Financial Entities in the Bitcoin Ecosystem NRP-29, and the Guidelines for the Authorization of the Operation of the Technological Platform of Services with Bitcoin and Dollars, is the regulatory framework that on September 7 made possible the implementation of the digital asset as a legal tender in our country.
There are positive and negative comments regarding such implementation. It is a fact that any radical change involves a lot of technical efforts to achieve its proper functioning, however, El Salvador at this time has become the first country to take such a step. At this moment the adoption of the digital asset by the population is low, nevertheless, private actors and financial education on the matter can improve such levels of adaptation, which if properly implemented could bring many advantages, from the financial inclusion of the Salvadoran population that has historically been excluded, given the speed and low transactional costs that make it an inclusive payment method, as well as the security and transparency of blockchain technology that allows auditing transactions.
It is important to think, once the implementation has been perfected, which are the next steps to enable a fully develop Crypto ecosystem in El Salvador? The answer is not entirely clear, however, it is important to provide legal certainty to the entire ecosystem, this implies that the regulations allow all the actors of the ecosystem to develop. Therefore, it is necessary to clarify the rules under which private actors will be able to carry out mining activities, minimum requirements, energy sources, etc. Furthermore, it is important to regulate the use of the rest of digital assets, to give certainty that they can be used as private payment methods. It is also important to regulate the different virtues of digital assets, tokenization and its different uses, the possibility of using digital assets as financial instruments, and the creation of new digital assets through Initial Coin Offerings. Additionally, it is essential to create a legal framework for data protection that guarantees the right of informational self-determination of Salvadoran citizens.
It is clear that there is still a long way to go, however walking step by step and through the right decisions, El Salvador can become a financialhub through digital assets, creating an investment pole and therefore permeate the different social strata, promoting the financial inclusion and development of the Salvadoran population.
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