Agence France-PresseJune 9, 2021 5:54:20 PM IST
Bitcoin will become legal tender in El Salvador, the country’s president said, becoming the first nation to adopt a cryptocurrency for daily use.
Lawmakers in the Central American nation’s Congress passed a bill Tuesday night that will eventually allow the famous volatile digital currency to be used for many aspects of daily life, from property purchases to tax contributions.
El Salvador’s President Nayib Bukele announced about the Bitcoin Law in a tweet.
The #BitcoinLaw it has been approved by a supermajority in the Salvadoran Congress.
62 out of 84 votes!
– Nayib Bukele 🇸🇻 (@nayibbukele) June 9, 2021
The 39-year-old leader said a majority of 62 of 84 lawmakers approved the bill, which he proposed last week.
The law was passed with the support of Bukele’s allies despite minority opposition parties, which had criticized the speed of the vote, refused to back it.
Cryptocurrencies have exploded in popularity due to their use as a store of value, the relative anonymity they offer users, and the wild price fluctuations that present opportunities for higher returns than investing in the world’s regular stock exchanges.
The volatility of bitcoin, which is currently priced at $ 33,814, and its murky legal status have raised questions about whether it could ever replace traditional currency in day-to-day transactions.
But El Salvador, a small nation where four out of 10 people live in poverty, has become the main crypto asset that has been backed by billionaires like Elon Musk and large financial companies such as PayPal in an attempt to boost its remittance-dependent economy.
El Salvador’s main currency is the US dollar and it is unclear how the country plans to implement bitcoin as a functional currency.
However, the Salvadoran leader has hailed virtual currency as “the fastest growing way to transfer” billions of dollars in remittances and to prevent intermediaries from losing millions of dollars.
Remittances from Salvadorans working abroad represent an important part of the economy, equivalent to approximately 22 percent of the Gross Domestic Product.
In 2020, remittances to the country totaled $ 5.9 billion, according to official reports.
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‘On the world’s radar’
Before the vote, Bukele said that the adoption of the cryptocurrency will bring “financial inclusion, investment, tourism, innovation and economic development” to the country.
“This is a law that will put El Salvador on the world radar, we will be more attractive to foreign investment,” said Romeo Auerbach, a deputy for the Gran Alianza por la Unidad Nacional party, an ally of Bukele.
The cryptocurrency market grew to more than $ 2.5 trillion in mid-May 2020, according to the Coinmarketcap page, fueled by interest from increasingly serious investors from Wall Street to Silicon Valley.
Between the beginning of 2020 and a mid-April peak of $ 64,870, the price of bitcoin gained nearly 800 percent.
But since then, the cryptocurrency has fallen in value by more than 50 percent.
Its price has fallen dramatically towards a symbolic threshold of $ 30,000 that it has not crossed since January, dragging other cryptocurrencies in its wake.
After Tuesday’s vote, the price rose more than five percent.
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