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El Salvador could become the first country in the world to make Bitcoin a legal tender. The country’s president has already supported the move and waiting for support from congress.
It also means El Salvador will now have two legal tenders – Bitcoin (BTC/USD) and the US Dollar, the country’s official currency.
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President Nayib Bukele stated that it will become very easy for Salvadorans living abroad to send funds home through Bitcoin. He stated,
In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy.
The new law will increase Bitcoin’s adoption
El Salvador’s economy is highly dependent on remittances or funds sent from Salvadorians living abroad. Such inputs make up about 20% of the nation’s gross domestic product (GDP). Each year over $4 billion is sent back home from the over 2 million Salvadorians living abroad. With this recent development, Bitcoin will be seeing increased adoption and usage.
The lawmakers in the Central American country’s Congress recently voted in the majority to favor the Bitcoin law. Shortly after the vote, Bitcoin rose 5% to $34,238.
The #BitcoinLaw has been approved by a supermajority in the Salvadoran Congress.
— Nayib Bukele 🇸🇻 (@nayibbukele) June 9, 2021
62 out of 84 votes!
History! #Btc🇸🇻
A faster means of receiving funds
The law also means that exchanges in Bitcoin will not be subject to capital gains tax. Also, tax contributions are now possible with Bitcoin while prices can now be shown in Bitcoin.
It’s not yet clear how El Salvador intends to launch Bitcoin as a legal tender, considering the volatility history of the cryptocurrency.
Mr. Bukele was confident that the introduction of the new law would improve the lives of millions, making it faster for people to receive funds from their loved ones abroad.
Presently, the fiat currency services charge high fees, and it could take several days before the transferred funds are cleared. But sending funds in Bitcoin will cut down on the charges and make payments faster, he reiterated.