9 June, 2021
In a first for Bitcoin as a cryptocurrency, the El Salvador Congress on June 9 approved a bill making Bitcoin a legal tender in the country.
El Salvador President Nayib Bukele made the announcement through Twitter. In addition, he also announced that people who invest Bitcoin in El Salvador will get the country’s citizenship with people investing three Bitcoins in country’s economy will be given citizenship by the government.
The bill was passed in El Salvador after getting 62 out of possible 84 votes.
“It is easy to dismiss this ruling as not significant given that the El Salvador GDP is only 27 BN, but the ruling could signal a new step for Bitcoin global adoption and is huge for ordinary El Salvadorians” said Ross Middleton, Chief Financial Officer of DeversiFi, a decentralized exchange.
“Governments and central banks around the world will be watching the El Salvador experiment to see if Bitcoin becomes part of daily life for payments, remittance and a reserve asset for banks and corporations in the country, ” he added.
Bitcoin being classed as legal tender in El Salvador means that every-day Salvadorians can easily make cross border payments without having to rely on the USD. Over 20% of GDP was made up from remittances back to El Salvador last year and therefore if El Salvador can attract even a small amount of crypto-economic activity to the country, it could be huge.”
“We may even see crypto-native companies setting up in El Salvador now that banking relationships in the country will be easier,” Middleton said.
The country currently uses the US dollar as the official currency. It has said that the exchange rates with the US dollar “will be freely established by the market.
The decision comes just few days after Bukele had said that he will send a bill to Congress next week to make bitcoin legal tender in the Central American nation.
“In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” Bukele said in a video shown at the Bitcoin 2021 conference in Miami.