A law has been approved by the Congress of El Salvador which allows Bitcoin to be classified as a legal tender in the country, making it the first nation to adopt cryptocurrency as a legal tender.
The law was passed with 62 out of 84 politicians voting in favour of the bill at the legislative assembly with President Nayib Bukele tweeting, “The #Bitcoin has just been approved by a qualified majority” while adding “History!”.
Bukele stated that the cryptocurrency would bring financial inclusion, investment, tourism, innovation and economic development to El Salvador while hailing it as the fastest-growing way to transfer billions of dollars in remittances, which represent a major chunk of the economy, as well as preventing millions from being lost to intermediaries.
In the year 2020, remittances to El Salvador totalled $5.9 billion according to official reports, while remittances from Salvadorans working overseas equates to 22% of Gross Domestic Product. The US dollar bill will also continue as a legal tender in the country and the use of Bitcoin will be optional.
Deputy of the Grand Alliance for National Unity party Romeo Auerbach said that the law will put El Salvador on the world’s radar and will be more attractive for foreign investment.
However, experts have stated that the country’s move to Bitcoin could potentially complicate talks with the International Monetary Fund where they are seeking a programme that is over $1 billion.
The cryptocurrency’s use as a legal tender will go into law in 90 days.