update 18 August 2021

El Salvador’s Passes the Bill to Take up BTC as a Legal Tender

The Salvadorian Congress garnered 62 out of 84 votes on Wednesday morning to become the first country to recognize bitcoin as a legal tender officially. President Nayib Bukele, who proposed the bill approved by Congress, is set to sign it later today.

Making History

According to El Salvador’sSalvador’s proposed bill, its citizens can now pay bills and taxes in bitcoin. Exchanges within the country’s borderline will not be subject to profit tax. Article 7 of the bill states that businesses have an obligation to accept the crypto when offered to them for goods and services.

President Bukele is delighted following the congress’ decision, as he visualizes the country is on its way to solving the financial inclusion issue. He noted that only 30% of the country’s population has access to essential financial services, and BTC will come a long way in boosting those numbers.

The head of the state also touched on the elephant in the room, being the risk of converting BTC to USD once merchants take the digital currency up. He said The Development Bank of El Salvador has set up a trust fund to cushion traders. The funds will enable the bank to convert bitcoin to the USA’s legal tender. He further explained this stating,

“If there’s an ice cream parlor, he doesn’t really want to take the risk, he has to accept bitcoin…………but he doesn’t want to take the risk of convertibility, so he wants dollars deposited in his banking account,……….he can ask the government to exchange his bitcoin to dollars,”

Trailblazing Bitcoin Adoption

According to article 11 of the proposed law, the country’s Central Bank will formulate regulations within ninety days after publishing the bill in the national gazette. Thus, El Salvador will become the first-ever country to involve BTC as a legal tender currency globally.

The country’s inflation rate is down 4% in the last decade, as recorded by inflation statistics tracker Statista. So if governments follow El Salvador’s route, they probably might have a chance to fight inflation, with bitcoin adoption increasing financial inclusivity among citizens as a bonus.

President Bukele hinted that El Salvador might consider exploring bitcoin mining activities. Following the BTC legal tender bill’s passing, he stated that the services around the crypto might prove profitable. In addition, he said that the country could tap into the energy released by volcanoes, which he considers economical and clean.

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