On August 31, 2021, with 64 votes, Congress approved the Law for the Establishment of the Bitcoin Trust (âFIDEBITCOINâ), by means of which a trust is established in the Development Bank of the Republic of El Salvador (â BANDESAL â), for the benefit of the users of the national wallet, represented by the Republic of El Salvador, whose purpose will be to support the bitcoin convertibility alternatives provided by the Salvadoran government. The parties participating in the Trust are:
- Constituent: Republic of El Salvador (“MINEC”)
- Trustee: BANDESAL
- Beneficiary: Republic of El Salvador (Wallet users)
The assets of the trust will be:
- US $ 150,000,000.00
- Funds raised by issuing securities
- Interest on investments
- Operating profits or losses
The law provides for the possibility of an administrative agent, which would be a different public entity that will administer and manage the use of the assets, according to the instructions of the grantor. In addition, it authorizes the Ministry of Finance (âMHâ) to transfer the initial resources of $ 150,000,000.00 to BANDESAL which may be increased by its operation (profits). This makes it possible to increase the assets of the Trust, along with its profits, without modifying the FIDEBITCOIN.
The Trust will be able to:
- “Carry out financing operations”.
- Issue of securities.
The settlor must keep the funds in a dollar deposit account with the Central Reserve Bank (âBCRâ). The Trust will have a Board of Directors for a 5-year term made up of 1 delegate from the following institutions: MH, MINEC, Secretary of Commerce and Investments, BANDESAL (without voting rights). The relevant functions of the Council will be as follows:
- Authorize the payment of any service provider necessary for its operations.
- Approve the optimal mechanisms for settling the costs of trading from BTC to USD and vice versa.
- Approve financial, operational and investment regulations.
- Authorize any agreement.
- Approve the fundraising policy.
- Approve the annual expenditure plan:
o Costs and operating expenses.
o Extraordinary expenses caused by volatility.
The Trustee will be responsible for the money transferred by the MH, any other assets of the Trust, and the responsibilities established by Bitcoin law. In addition, he will have the following main obligations:
- Create the financial, operational and investment policy.
- Open accounts, conclude agreements with the BCR and any other public or private, national or foreign entity.
- Invest the profits of the Trust in accordance with the instructions of the Board of Directors.
- Execute and deliver any agreement authorized by the Board of Directors.
- Allocate resources to achieve the objectives of the Trust.
- Any other resolution of the board of directors.
BANDESAL, the administrative agent, MH or MINEC, will establish the operation of the Trust as follows:
- Physical and technological infrastructure installations to be carried out necessary for exchange transactions.
- Any other essential operation.
- The acquisition of the goods and services mentioned above must respect a minimum of criteria such as: governance and risk management, AML prevention, prevention and proliferation of weapons of mass destruction, among others.
- MH can transfer the incentive money ($ 30) in any way.
- Transparency: all operating regulations will be published on the BANDESAL website.
- All services to be contracted are excluded from the application of the law on public procurement and public procurement.
The FIDEBITCOIN must be sent to the executive power to be opposed, sanctioned or observed. Due to the current situation between legislative and executive powers, it is highly likely that it will be sanctioned and published in the Official Journal. Once the law is published, it will enter into force within 8 days of its publication.