El Salvador Opposition Party Files Lawsuit Against Bitcoin Adoption Ruling

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In Brief
  • A citizen group led has filed a lawsuit against El Salvador adopting bitcoin as legal tender.

  • El Salvador passed a law adopting bitcoin as legal tender on June 9.

  • One lawyer feels this could be a ruse by the ruling party to establish legitimacy for law.

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A citizen group in El Salvador, led by opposition politician Jaime Guevara, filed a lawsuit against the country for adopting bitcoin as legal tender.

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Guevara, a member of the opposition party Farabundo Martí National Liberation Front (FMLN), says the law that made bitcoin legal tender is unconstitutional. Meanwhile, members of the group of citizens say the adoption of the cryptocurrency as legal tender has no “legal basis.” One member called the law “a decree lacking legality, lacking foundation, without considering the significance and harmful effects that such a law will cause to this country.” 

It seems that a majority of El Salvador’s citizens are not in favor of this recent adoption. According to a survey by the Chamber of Commerce and Industry of El Salvador, 80% of Salvadorans would not agree to receive payments in bitcoin.

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El Salvador’s bitcoin law

The move comes in response to El Salvador recently adopting bitcoin as legal tender. El Salvador President Nayib Bukele initially spoke about the benefits during the recent Bitcoin conference in Miami. These included an increase in jobs and boosted investments in El Salvador.

Shortly thereafter on June 9, President Bukele submitted a bill that would recognize bitcoin as legal tender in the country. The bill then passed, making El Salvador the first country in the world to recognize bitcoin as legal tender. With the adoption underway, President Bukele announced that he would use energy from volcanoes to power bitcoin mining.

A test for the Constitutional Chamber

Guevara said this would be a test for the magistrates of the Constitutional Chamber, who were appointed by the ruling New Ideas party on May 1. “We are going to put this Chamber to the test to see what response they are going to give to the public,” said Guevara.

However, others see this move as more calculated. Lawyer Salvador Enrique Anaya believes the ruling party may have indirectly initiated these proceedings. He says they may have done this to establish the legitimacy of the law by having it challenged but ultimately upheld by the Constitutional Chamber. Conversely, Anaya also said they have no idea how to implement the law, which is why “they themselves would seek to have it declared unconstitutional.”

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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