El Salvador has become the first nation to recognise cryptocurrency as legal tender after it passed a law making Bitcoin one of its currencies.
On 8 June, the country’s president Nayib Bukele sent the Bitcoin Law to the Salvadoran Congress for approval. The law passed with a majority of 62 out of 84 votes.
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The law aims to promote financial inclusion and economic growth. According to the bill, 70% of El Salvador’s population does not have access to traditional financial services.
I’ve just sent the #BitcoinLaw to Congress
pic.twitter.com/DljnxsXlyt — Nayib Bukele
(@nayibbukele) June 9, 2021
The document also states that the country will regulate Bitcoin as unrestricted legal tender.
It will be unlimited in any transaction and its exchange rate between it and the United States dollar, El Salvador’s current legal currency, will be freely established by the market.
Citizens will be able to pay tax in Bitcoin and, like with other legal tender, exchanges will not be subject to capital gains tax.
The law also states the government will provide instant convertibility between Bitcoin and USD and necessary training for those who want to access transactions.
At the time of writing, Bitcoin was worth around $34 600 (R468 500) per token. However, the cryptocurrency is considered extremely volatile.
In April, its price hit an all-time high of $64 829 (R878 000).
Other countries around the world have made moves to regulate cryptocurrency. China banned banks from engaging in cryptocurrency transactions.
Meanwhile, the US is looking into taxing cryptocurrency transactions worth more than $10 000.
The Bitcoin Law will come into effect in El Salvador ninety days after it appearing in the government gazette.
Feature image: Unsplash/Bermix Studio
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