Yesterday, after Congress passed President Nayib Bukela’s proposal to accept Bitcoin, El Salvador, which has no national currency, became the first country in the world to introduce Bitcoin as legal tender.
Despite concerns that El Salvador and the International Monetary Fund (IMF)’s $1 billion plan may be adversely affected, lawmakers voted 62 out of 84 votes to pass a law accepting Bitcoin.
President Bukele advocated the use of Bitcoin because, in his opinion, it can protect foreign exchange remittances of foreigners from the extremely high costs of US dollar transfers.
Booker pointed out that the U.S. dollar will remain legal tender.
“It will bring financial inclusion, investment, tourism, innovation and economic development to our country,” Booker said.
El Salvador is a big country of immigrants. It is estimated that about 6 billion US dollars of remittances come from the United States each year and are sent by about 2 million diasporas, accounting for one-fifth of GDP.
These remittances from the United States reach Salvadoran residents through several financial intermediaries, each of which charges a 20% fee, while cryptocurrency has no transaction fees.
The head of state stated that the use of Bitcoin will be left to free choice and will not pose a risk to those who use it. He went on to say that the government will ensure that it can be converted into U.S. dollars during transactions through the large-scale foundation of the state-owned development bank BANDESAL’s 150 million US dollars.
According to the law, companies must accept Bitcoin as a payment method for goods and services. You can use the cryptocurrency to pay taxes.
The use of Bitcoin as legal tender will begin within 90 days, and the exchange rate of Bitcoin against the U.S. dollar will determine the market.
Bitcoin recorded its best days in the past two weeks, increasing by 6% and approaching the price of $35,200.
Financial regulators have warned that Bitcoin encourages money laundering and other illegal activities. Bukele refuted these remarks and claimed that criminals were already using U.S. dollars and other money laundering funds extensively.