El Salvador adopts Bitcoin as legal tender

According to the latest news, El Salvador has become the first country to adopt Bitcoin as legal tender.

Notably, the President of El Salvador’s bill to make Bitcoin legal tender passed Congress with a supermajority.

In a Twitter Spaces conversation with 22,000 listeners, President Nayib Bukele announced he would sign off on the historic law later tonight or first thing tomorrow.

According to him, it goes into effect immediately, clarifying the government would allow 90 days for putting the infrastructure into place.

The price of the largest cryptocurrency in the world increased by 5% and traded at $34,239.17 shortly after the vote.

Prices can now be shown in Bitcoin. Tax contributions can accept with digital currency and, exchanges in Bitcoin will not be subject to capital gains tax.

The dominant cryptocurrency has wild price swings that have prompted critics to suggest it is unsuitable to be an effective currency. Remarkably, it’s unclear how El Salvador will ultimately roll out BTC as legal tender.

Cryptocurrency as a way to raise financial inclusion

The proposed law revealed that the exchange rate with the U.S. dollar will be established by the market. Notably, El Salvador’s official currency is the U.S. dollar.

The law also says that the state will promote the necessary training and mechanisms for a population to access bitcoin transactions.

According to the Bitcoin Law, nearly 70% of El Salvador does not have access to traditional financial services. Many see cryptocurrency as a way to raise financial inclusion.

However, the proposal will need to go through El Salvador’s legislative process before passing as law.

President Bukele’s move to submit the law to Congress comes after he reported last week that El Salvador has struck a partnership with digital wallet company Strike. He said it aimed to build the country’s modern financial infrastructure using bitcoin technology.

In April, Bitcoin reached an all-time high of $64,829.14 however has since sunk by almost half. The dominant cryptocurrency is still up over 230% over the last 12 months.