I'm no lawyer, but if I understand it correctly: Yes, the merchants are pretty much forced to receive bitcoin, but they're
not required to keep the BTC. They can automatically convert the BTC to USD (through whatever software they're using) if they want to stay away from the volatility.
it doesn't make sense for it to be the first option because not all shops will have the infrastructure to (e.g. a small convenience store or grocery shop). If it is the second option, then I doubt many shops will opt for it.
I've read about the government providing a specific software for the merchants, though they're not forced to use it. They can use other non-custodial wallets.