El Salvador buys 400 Bitcoins ahead of nationwide roll-out, price jumps

SAN SALVADOR(REUTERS, BLOOMBERG) -El Salvador holds 400 Bitcoins, President Nayib Bukele said on Monday (Sept 6), one day before the country formally adopts it as legal tender alongside the United States dollar.

The currency has a market value of about US$20 million (S$26.8 million) at current prices. 

Bitcoin temporarily climbed above 1.49 per cent to more than US$52,680 on Monday evening, Refinitiv Eikon data showed, with a Reuters market analyst putting it on track for US$56,000-US$56,300.

The country plans to buy “a lot more” of the coins, Mr Bukele said in a separate post, after buying the first batch of 200. 

El Salvador is due to legalise Bitcoin on Sept 7, a move that the popular Mr Bukele said will save Salvadorans living abroad millions of dollars in commissions on money they send home.

But polls show Salvadorans are sceptical about using Bitcoin, wary of the volatility of the cryptocurrency that critics say could increase regulatory and financial risks for financial institutions.

Enthusiasts and detractors alike will be monitoring the experiment to see if a significant number of people want to transact with Bitcoin when it circulates alongside the US dollar, and whether it brings any benefits to the violent, impoverished country.

Its adoption will get an initial boost from the government’s Bitcoin wallet Chivo, which comes pre-loaded with US$30 worth of the currency for users who register with a Salvadoran national ID number. 

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