El Salvador Passes Law Making Bitcoin a Legal Tender
El Salvador has penned down its name in gold in the annals of history with the latest announcement that President Nayib Bukele’s bill to make Bitcoin a legal tender has been passed into law. This is following his promise at the 2021 Bitcoin Conference to make the first-ever cryptocurrency a legal tender. He has finally backed his promise with necessary actions following the Congress’s latest law on Bitcoin which passed with a vast majority of 62 votes out of 84 votes. With this new law, El Salvador is now the first country in the history of cryptocurrencies to recognise Bitcoin as a legal tender.
President Nayib Bukele announced this historic move on a TwitterSpace conversation (a new feature on Twitter) with about 22,000 listeners at some minutes after 5 A.M. UTC, and that he would ratify the law at a later time today or tomorrow. He further said the law will take effect upon signing, however, a 90-day period will be given by the government for the infrastructure to be set up and ensure total compliance with the new law.
He opined that all the businesses in El Salvador will have no choice to comply with the new law as it is compulsory and made an analogy using Mexico as a case in point. He was quoted saying with reference to enterprises in the Central American country, “If you go to Mexico, they have to take your pesos. In El Salvador’s case, bitcoin will be a legal tender together with the US Dollar,” which is the country’s official currency.
In pursuance of the new law on Bitcoin, President Bukele will be having a discussion around the law with the International Monetary Fund (IMF) on Thursday. The president proposed that there will be an official Bitcoin wallet released by the government, ( although it will be optional). The government is also proposing to secure a $150 million trust fund in Bitcoin to mitigate risks that businesses in the country may likely incur as a result of the law. Interestingly, as part of the law, non-citizens who invest 3 BTC in the country would be entitled to permanent residency. The government is looking to incentivize investors who might be looking to set up businesses in the country due to the new law.
President Bukele Releases Details of The Recent Law.
President Bukele issued details of the bill in English and Spanish after sending it out to the Congress earlier in the day. With this passage of the bill into law, prices of consumer goods will now be updated in Bitcoin as well as USD. In the same vein, taxes will be paid in BTC and BTC transfers will not have capital gains tax imposed on them. As reported by Tokenhell, the US had imposed a 40% tax on capital gains for crypto transfers in their bid to regulate the market.
Based on the law, the exchange rate between BTC and USD will be determined by the market. The law also states that ‘training and mechanisms’ will be put in place to educate the large population of El Salvadorans who still make use of cash on Bitcoin. El Salvador is desirous to promote financial inclusion as regards the new law. The recent law may spell an uptrend for the market hopefully.
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