El Salvador Adopts Bitcoin as Legal Tender

On Wednesday, El Salvador became the first country to recognize Bitcoin as legal tender officially. The bill proposed by El Salvador President Nayib Bukele treats Bitcoin as a legal tender along with the U.S. dollar. Most of the nation’s legislature voted in favor of this bill, making it the first nation to adopt Bitcoin as a legal tender.

The details – The proposal for El Salvador to accept Bitcoin as a legal tender received a supermajority of votes. Sixty-two members from the legislature voted in favor of the bill, 19 in opposition, and 3 in abstentions. One of the major considerations, as per president Nayib Bukele, was that the step would boost financial inclusion in the country where 70% of citizens lack access to financial services.

What Does This Mean?

Under the provisioning of the bill, which will treat Bitcoin as a legal tender, it will mandate all businesses to accept Bitcoin as a payment method for goods and services. At the same time, the government will provide facilities for the entities who do not want to accept Bitcoin payment due to its volatile nature. In addition to this, citizens can pay their taxes in Bitcoin. There will not be capital gains taxes on Bitcoin transactions.

A trust fund will be set up at the Development Bank of El Salvador. The trust fund would sell some of the Bitcoin it receives for dollars to replenish the fund. Furthermore, Bukele also revealed that the country plans to offer permanent residency to any individual who invests three BTC into El Salvador’s economy.