El Salvador could become the first country in the world to convert Bitcoin into legal tender. The country’s president has already supported the measure and awaits the support of Congress.
It also means that El Salvador will now have two legal tenders: Bitcoin (BTC / USD) and the US dollar, the official currency of the country.
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President Nayib Bukele stated that it will be very easy for Salvadorans living abroad to send funds home via Bitcoin. He stated,
In the short term, this will create jobs and help provide financial inclusion to thousands of people outside of the formal economy.
New Law Will Increase Bitcoin Adoption
El Salvador’s economy is highly dependent on remittances or funds sent by Salvadorans living abroad. These inputs represent approximately 20% of the nation’s gross domestic product (GDP). Each year, more than $ 4 billion is sent home to the more than 2 million Salvadorans living abroad. With this recent development, Bitcoin will see increased adoption and use.
Legislators in the Congress of the Central American country recently voted by majority in favor of the Bitcoin law. Shortly after the vote, Bitcoin was up 5% to $ 34,238.
The #BitcoinLaw has been approved by a supermajority in the Salvadoran Congress.
62 out of 84 votes!
– Nayib Bukele 🇸🇻 (@nayibbukele) June 9, 2021
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 displayed in Bitcoin.
It is not yet clear how El Salvador intends to launch Bitcoin as legal tender, considering the cryptocurrency’s history of volatility.
Mr. Bukele was confident that the introduction of the new law would improve the lives of millions of people, making it faster for people to receive funds from loved ones abroad.
Currently, fiat currency services charge hefty fees and it may take several days for transferred funds to clear. But sending funds in Bitcoin will reduce fees and make payments faster, he reiterated.
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