Bitcoin is now legal tender in El Salvador

Bitcoin is now officially a legal tender in El Salvador. El Salvador is the first country in the world to adopt bitcoin as a legal tender, following President Nayib Bukele’s proposal to Congress to adopt the cryptocurrency.

62 out of 84 possible lawmakers approved the move to create a law to adopt bitcoin. In a report by Reuters, regardless of the concern about the potential impact on El Salvador’s program with the International Monetary Fund, the proposal has been approved by the majority of the Salvadoran Congress.

President Bukele has promoted the use of bitcoin for its potential to help Salvadorans living abroad to send remittances home, while at the same time, the U.S. dollar will also continue as legal tender, as El Salvador does not have its own currency. Reuters also reported that bitcoin transactions would be by choice and tied to the dollar exchange rate.

Photo credits: Jose Cabezas/Reuters

The approval of bitcoin as legal tender in the country means that it can be used as payment for goods and services for all businesses, except those unable to process such transactions. In addition, bitcoin can also be accepted as payment for tax contributions.

Before the Congress’ decision, Bukele mentioned that adopting the cryptocurrency would bring “financial inclusion, investment, tourism, innovation and economic development” to El Salvador.

Additionally, Bukele also mentioned that he had instructed state-owned geothermal electric firm LaGeo to develop a plan to offer bitcoin mining facilities using renewable energy from volcanoes in El Salvador.

The president stated the idea was to establish a bitcoin mining hub around the country’s geothermal potential. He also mentioned that El Salvador would offer citizenship to people who showed evidence they had invested in at least three bitcoins, according to the Reuters’ report.

The use of bitcoin as legal tender will begin in 90 days, with the bitcoin-dollar exchange rate set by the market. However, Bukele said that the government and Central Bank did not currently hold any bitcoin.