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Opposition poses constitutional challenge to El Salvador’s Bitcoin law

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Member of Parliament of El Salvador Jaime Guevara from the opposition party Farabundo Martí National Liberation Front, together with a group of like-minded people, filed a lawsuit demanding to declare the presidential decree on the legalization of Bitcoin unconstitutional. The lawsuit states that the decision of the El Salvadorian authorities to recognize the main cryptocurrency as a means of payment is contrary to the constitution. And can also become disastrous for the country’s economy.

Guevara said the complaint would examine the newly appointed magistrates of the Supreme Court’s Constitutional Chamber.

One of the plaintiffs, Oscar Artero, claim: law recognizing Bitcoin as a means of payment aimed at “robbing the population”. Thus, according to him, the country’s authorities want to force residents to trade cryptocurrencies.

The plaintiff expressed hope that the Constitutional Chamber of the Supreme Court will support his position. He didn’t specify which point of the document contradicts the main law of the country.

According to a survey by the Chamber of Commerce and Industry of El Salvador, eight out of ten residents are against payments in the first cryptocurrency.

It is not yet clear how to implement the Bitcoin law

As a reminder, Bitcoin officially recognized as a means of payment on June 9th. The country’s parliament made the corresponding decision. Then the head of state Nayib Bukele signed the document.

According to the law, prices in El Salvador can be set in Bitcoin. And you can also pay taxes in cryptocurrency. The Bitcoin exchange will not be subject to capital gains tax. While you can exchange Bitcoins for dollars (the main currency in El Salvador) at the market rate.

The initiative didn’t find a response among local money transfer services – only a few integrated support for digital gold.

On June 16, Minister of Labor and Social Welfare Rolando Castro announced that they are not yet ready to switch to paying salaries in cryptocurrency.

And Salvadoran lawyer Enrique Anaya commented that it’s not clear in the President’s House how to implement the Bitcoin law.

Experts have come to the conclusion that the adoption of cryptocurrency can equally stimulate both the inflow of investments to El Salvador and the withdrawal of capital.

According to JPMorgan analysts, the decision threatens relations with the IMF, on whose help the economy of El Salvador depends. Fund spokesman Jerry Rice said that the legalization of cryptocurrency could entail a number of risks and regulatory problems.

The Central American Bank for Economic Integration has announced support for El Salvador on the implementation of Bitcoin. The World Bank declined to help the country, citing environmental and transparency concerns.

Conclusion

El Salvador’s ambitious plan to make Bitcoin legal tender could be thwarted if the relevant law is declared unconstitutional.

According to the opposition, the authorities didn’t develop a sufficient legal basis for the recognition of digital gold as a means of payment. And also didn’t think about the likely negative consequences for the state economy.

So, the opposition hopes that the Constitutional Chamber of the Supreme Court will side with the plaintiffs.

However, even if the Bitcoin law remains in effect, there are still many obstacles to widespread adoption due to scaling restrictions.

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