A central American country El Salvador is looking to make a law that recognizes Bitcoin in the same way as the US Dollars. This may be the first country in the world to accept bitcoin as legal tender.
On Saturday, 5th of June 2021 at the Bitcoin conference held in Miami, Nayib Bukele, President of El Salvador announced that he was looking to introduce legislation that will recognize the cryptocurrency the same way as the US dollar, which the country currently uses.
Nayib Bukele, 39, said in a prerecorded address to Bitcoin 2021 said “Next week I will send to Congress a bill that will make bitcoin a legal tender,” said Bukele. He framed the bitcoin move as forward-looking and utopian, saying El Salvador is “starting to design a country for the future” by looking for “the best examples of ideas from history and around the world.” “I believe bitcoin could be one of these ideas,” he said.
The El Salvadoran President said he would partner with digital-wallet company Strike to build the necessary financial infrastructure, using bitcoin technology. Speaking about the announcement, Strike’s CEO and founder, Jack Mallers, said: “Adopting a natively digital currency as legal tender provides El Salvador the most secure, efficient and globally integrated open payments network in the world”.
Many details of the plan’s rollout are still unclear, but the proposal has a good chance to become law because Bukele’s party — Nuevas Ideas, or New Ideas — had landslide victories in recent legislative elections and now controls the Congress.
Bitcoin, which traded at about $36,700 late Sunday night as the most valuable digital token, would then be used alongside the U.S. dollar, as El Salvador’s official currency.
Bukele also took to his Twitter handle to share that bitcoin has a market cap of $680 billion. “If 1% of it is invested in El Salvador, that would increase our GDP by 25%,” he said. “On the other hand, bitcoin will have 10 million potential new users and the fastest growing way to transfer 6 billion dollars a year in remittances.”
Remittances are a key issue for a country where 70% of the population does not have a bank account, according to Bukele. “By using bitcoin, the amount received by more than a million low-income families will increase to the equivalent of billions of dollars every year,” he said.
El Salvador is among a growing number of Latin American countries gravitating toward digital cryptocurrencies, viewed by some as a possible solution to the financial struggles and instability that strain the region’s economies.
Cryptocurrency allows widely underbanked societies to participate in the global economy, part of their appeal and growing popularity in Latin America, said Tony Delgado, founder of the financial literacy platform Latino Wall Street.
“This opens up to everyone,” Delgado said in an interview. “No matter where you are from, what color is your passport, if you are a peasant in the mountains of Peru, or a student in Caracas, bitcoin does not discriminate like the traditional global banking system may.”
To further his plans on making Bitcoin the El Salvadoran legal tender, President Bukele has also promised “immediate permanent residence for crypto entrepreneurs” and also swayed the prospect of bitcoin without a capital-gains tax. This announcement has since been received with mixed feelings from Salvadorans.