Since its historic adoption of Bitcoin (BTC) as a legal tender, El Salvador has been working to develop interoperability of its new currency. Recently, 50 Chivo ATMs were opened in the United States.
The large Salvadoran population in the US
First, according to Pew Research Center data, approximately 2.3 million people of Salvadoran origin resided in the United States in 2017. Since 2000, the number of Salvadoran U.S. residents has increased by 225%, from approximately 711,000 to 2.3 million residents. Next to Cubans and Mexicans, Salvadorans are the third largest population of Hispanic origin living in the U.S.
In addition, the Salvadoran-born population is relatively poor. According to the aforementioned data, about 18 percent of U.S.-born Salvadorans live below the poverty line. Yet, these Hispanics often make the choice to move to the United States in order to earn higher wages than in El Salvador, and thus send some of it back to their families. For example, in 2018, the amount of remittances coming mostly from the United States is estimated to be 21% of El Salvador’s GDP.
However, the fees and commissions charged by money transfer organizations like Western Union or MoneyGram are exorbitant. In fact, according to the President of El Salvador, Nayib Bukele, these money transfer fees bring in approximately $400 million per year for these money service providers.
Thus, the development of the Bitcoin Chivo wallet allows Salvadorans to escape the “racket” of money transfer organizations. As such, it is imperative that its use becomes widespread in the United States.
The Salvadorian ATM Chivo sets up in the USA
Since September 7 and the entry into force of the Bitcoin Law in El Salvador, the Chivo application, a Bitcoin wallet, is available. Of course, its use remains optional, but it has been the subject of incentives. As such, the government has offered $30 in BTC to Salvadoran users. One of the advantages of this wallet is that it allows to withdraw bitcoins in dollars, or to send funds without paying commission directly from Chivo ATMs. Currently, El Salvador has 200 functional Chivo ATMs. Now it’s time to conquer the US territory, where 50 Chivo ATMs have been installed in 10 different US cities.
Chivo’s 500,000 users can use these ATMs to make fiat withdrawals (including dollars), or to send bitcoin or dollars to relatives without paying commissions. However, since its launch the Chivo wallet has experienced problems and had to be taken offline to resolve them. According to President Bukele, this is now history, as 95% of the problems are said to be solved already. This fix includes problems encountered during bank transfers.
At the same time, a bill introduced by Treasury Secretary Janet Yellen, among others, could put everything in question. As part of the “Tax Compliance Agenda for American Families”, she has urged lawmakers to include a reporting requirement for U.S. bank accounts. The proposal would require U.S. banks to report transactions over $600 to the IRS.
