El Salvador President Nayib Bukele has clarified that the nation’s Bitcoin law only mandated Bitcoin acceptance among large corporations, rather than small merchants. When the law took effect, its contentious Article 7 hadn’t actually been enforced on 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 Bitcoiners. “Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service,” read an English translated version of the text.
A law is only meaningful if enforced, however. In a recently released interview, President Bukele clarified that the stipulation only applies to large corporations. “The small guy – he can do whatever he wants,” he said.
Bukele stated that the law wasn’t even being enforced – nor were there any plans to enforce it anytime soon. However, it does provide the capability of enforcement if required 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 reveal for being “contrary to the ideals of freedom”. Alternatively, Bukele believes that the article enhances freedom for average customers to choose which currency they would like to buy products with.
“You can’t put [this law] into work without it,” he explained. “You have to create an environment where their Bitcoin is accepted as a method of payment with the big corporations.”
Bukele’s interviewer Peter McCormack found that the Bitcoin Law had its intended effect on the ground in El Salvador. Whereas large stores like Starbucks and Walmart were ready to accept Bitcoin right on September 7th, sparse 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 alleviated any over-compulsory implications of the legislation.
The former enacts state-provided alternatives for merchants accepting Bitcoin to automatically convert their holdings to dollars if desired. The latter stipulates that merchants without the technological capacity to accept Bitcoin are excluded from article 7.
When enacted, polls indicated that a vast majority of Salvadorans disapproved of the Bitcoin law. Nevertheless, the state-provided Chivo wallet amassed more active users than any Salvadoran bank within under three weeks.