Bitcoin acceptance does not apply to small merchants in El Salvador, but is designed to ensure “freedom of choice” for customers in big box stores.
The president of El Salvador, Nayib Bukele, has clarified that the nation’s Bitcoin law only mandates the acceptance of Bitcoin among large corporations, rather than small merchants. When the law came into force, its controversial article 7 had not been applied to anyone.
The nature of article 7
The Bitcoin law, which made Bitcoin legal tender in El Salvador last September, contained a specific stipulation that proved controversial even among Bitcoin users. “Every economic agent must accept bitcoin as a form of payment when it is offered to someone who acquires a good or service” read an English translated version of the text.
However, a law only makes sense if it is applied. In a recently released interview, President Bukele clarified that the stipulation only applies to large corporations. “The little guy, he can do whatever he wants,” he said.
Bukele claimed that the law was not even being applied, nor were there any plans to enforce it in the short term. However, it does provide the ability to execute if needed against “big corporations” or “big banks”.
Many within the crypto community, from CoinMetrics co-founder Nic Carter to Ethereum co-founder Vitalik Buterin, criticized Article 7 upon its disclosure as being “contrary to the ideals of freedom.” Alternatively, Bukele believes the article enhances the freedom for average customers to choose which currency they would like to buy products with.
“You can’t put [this law] work without him,” he explained. “You have to create an environment where their Bitcoin is accepted as a payment method with big corporations.”
Bukele’s interviewer, Peter McCormack, found that the Bitcoin Law had the desired effect on the ground in El Salvador. While big box stores like Starbucks and Walmart were ready to accept Bitcoin on September 7, a few small merchants in the San Salvador market were prepared at the time.
Articles 8 and 12
The president also highlighted that articles 8 and 12 of the Bitcoin law eased any overly mandatory implications of the legislation.
The former enacts state-provided alternatives for Bitcoin-accepting merchants to automatically convert their holdings to dollars if they so choose. The latter stipulates that merchants without the technological capacity to accept Bitcoin are excluded from article 7.
When it was enacted, polls indicated that the vast majority of Salvadorans disapproved of the Bitcoin law. Yet the state-provided Chivo wallet racked up more active users than any Salvadoran bank in less than three weeks.