El Salvador has accepted President Nayib Bukele‘s proposal for a bill to designate Bitcoin as legal money. They have become the first country in the world to officially classify Cryptocurrency as a legal currency.
Despite concerns about the possible impact on El Salvador’s IMF fund. A majority of MPs voted in favor of the move to draught legislation. This voting will legally accept cryptocurrencies. President Nayib Bukele tweeted:
“The Bitcoin Law has just been passed by a qualified majority.”
Debate among researchers has praised Bitcoin for its ability. To enable Salvadorans working abroad to send money home. Simultaneously stating that the US dollar will remain legal money.
What is the outlook for El Salvador’s new currency?
Bukele stated in a tweet just before the vote:
“It will bring financial inclusivity, investment, and economic growth to our nation.”
He went on to say that using Bitcoin will not pose any hazards to users. In 90 days, its usage as a legal currency will become law. Bukele stated:
“The government will ensure convertibility. To the precise value in dollars at the time of each transaction.”
Bukele also intends to establish a $150 million trust at a state-run development bank. He did this to allow Bitcoin to be converted to US dollars. Bukele told Fox Business: “I don’t like it because it’s another currency fighting against the dollar.”
Bukele went on to say that he wanted the dollar to be: “the world’s currency.”
The Central American Institute for Fiscal Studies. Ricardo Castaneda told the Wall Street Journal that:
“adopting cryptocurrencies may also assist the government cushion possible economic penalties. If bilateral relations with the US continue to worsen.”
El Salvador became the first country to approve bitcoin as a legal tender. Businesses would be forced to accept Bitcoin payments for products. And also for bank loans. People will be able to pay taxes using Cryptocurrency. El Salvador has been particularly vulnerable to US economic penalties. Since adopting the US currency in 2001. In times of crisis, like the COVID-19 epidemic. Using the US dollar limits a country’s capacity to utilize economic policy. Or to revive the economy. Bitcoin’s value remains volatile. Making it unsuitable as legal tender people might rely on to pay for necessities like food and rent. Bitcoin, a virtual asset with no direct connection to the real economy. It has seen large fluctuations in value over the years.
El Salvador Is Using Bitcoin To Print Money.
For all debts, Bitcoin will be valid tender. Unless they are technologically incapable the merchants must accept bitcoin. For products and services. Bitcoin is effectively worthless as a payment method. Cryptocurrency is merely a dollar replacement. Accounts will held in US dollars. Article 15 of the bill states that every provision of a prior law, that would control bitcoin is repealed. Encompassing enabling act as long as bitcoin is concerned. The law will go into force in 90 days. A quarter of Salvadorans live in the United States and send money home. In 2019, remittances were more than $5.6 billion. Which was equal to El Salvador’s total export revenue. These funds are sent to the recipients after the deduction of the fee. The government along with its bitcoin partners want that money. There are many other Cryptocurrencies like Etherum, Altcoin, Monero, and Litecoin .