Bitcoin will officially be recognized as legal tender in El Salvador starting September, according to draft guidelines reported by CoinTelegraph.

  • The draft regulations indicate that Bitcoin will be formally adopted on September 7. Financial institutions will have to secure central bank approval to offer digital wallets, and applications should include product offerings, target market details, and risk assessments, among others.
  • All customers will have to undergo know-your-customer (KYC) verification, and the transactions will be fully monitored and analyzed in full compliance with anti-money laundering procedures.
  • All Bitcoin holdings of institutions are required to be fully backed versus fractional reserves. Dollars will be stored at the central bank, with Bitcoin will be held by a custodian who can be contracted out.
  • The drafts were titled “Guidelines for Authorization of Operation of the Digital Wallet Platform for Bitcoin and Dollars” and “Technical Standards to Facilitate the Application of the Bitcoin Law.”  These were released for consultation by the Banco Central de Reserva on August 17.

El Salvador approved the Bitcoin Law on June 9, seeking to make Bitcoin acceptable for all businesses in the country. BTC is down 1.00%.