Cryptocurrency payments provider Flexa has launched Lightning Network payments with select partners and merchants in El Salvador as the country rolls out bitcoin as legal tender.
Following the June 9 passage of legislation, El Salvador has become the first country to make bitcoin a national currency, and as such the country becomes a testing ground for making volatile cryptocurrencies and the rails they run on usable for everyday payments.
And Flexa is not alone: Lightning firm OpenNode is powering a McDonald’s integration that briefly went viral on Tuesday.
The Lightning Network is a technique of aggregating bitcoin payments and settling them instantly, with the net transaction later added to the Bitcoin blockchain.
How Flexa got there
Flexa has built wallet and payment infrastructure in the U.S. that allows users to spend multiple cryptocurrencies for point-of-sale purchases at merchants such as Nordstrom, Barnes & Noble, Express or Lowe’s.
“When this El Salvador regulation got put in place, we actually got approached by merchants and other entities in El Salvador asking for us to set this up for them in a compliant way, because they’re working with our counterparts in the U.S.,” Flexa co-founder Tyler Spalding told CoinDesk in an interview. “So there ended up being a really great opportunity to help merchants, and now banks particularly, to be able to process these sorts of digital payments.”
Spalding said a full list of merchants, partners and banks that Flexa is working within El Salvador would be announced shortly. Flexa General Counsel Daniel McCabe worked closely with the legal and compliance team at Crowell Moring in New York City and certain regulatory authorities in El Salvador to make the launch possible, Spalding added.
Behind the scenes, Flexa provides instant crypto payments at point of sale by sending the merchant authorization that the payment is being paid and cleared, while collateralizing the transaction until the crypto eventually comes to Flexa.
“Flexa enables any Lightning channel to be used, and we collateralize getting that Lightning channel back on-chain,” said Spalding. “So, to a merchant, we can now guarantee that any Lightning payment will 100% be settled with you in the future.”
In the meantime, El Salvador is still working out the kinks.
In the early hours of Tuesday morning, technical errors were registered with the Chivo wallet and the government interrupted its use to reinforce “technical aspects,” according to a government statement published on Tuesday.
Andrés Engler contributed reporting.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.