El Salvador’s Congress approved a law on June 9 that makes Bitcoin, the world’s largest cryptocurrency, legal tender in the country.
The Central American nation has become the first to recognize Bitcoin as legal cash. Its legal tender status will be established in 90 days.
The move came after President Nayib Bukele announced on June 5 that he would introduce a measure in Congress to address the issue. Bukele stated this in a video aired at the Bitcoin 2021 conference in Miami “generate jobs in the short term and provide financial inclusion to thousands outside the formal economy”.
He added that the proposed bill could “transform” the remittance-dependent economy where “70 percent of the population does not have a bank account and works in the informal economy.”
Martijn Bolt, a Blockchain Implementation Specialist, predicted that “El Salvador will turn into a financial powerhouse of the future” after hearing the news.
Bukele underlined that the US Dollar will remain legal tender and that using Bitcoin will be optional, noting that users will not be in danger. “The government will guarantee the convertibility to the exact value in dollars at the moment of each transaction,” Bukele said.
According to government figures, remittances from Salvadorans working abroad account for 22% of the country’s Gross Domestic Product (GDP) and totaled $5.9 billion in 2020. Bukele said Bitcoin “represents the fastest growing way to transfer those billions of dollars in remittances and prevent millions from being lost to intermediaries”.
“Thanks to the use of Bitcoin, the amount received by more than a million low-income families increases by several billion dollars every year. This improves life and the future of millions of people,” he added.
Experts are concerned that the development could “complicate talks” over El Salvador’s program with the International Monetary Fund (IMF), from whom it is requesting more than $1 billion.
Meanwhile, the worldwide cryptocurrency market cap is $1.50 trillion as of June 9, down 3.04 percent from the previous day, while total crypto market volume over the last 24 hours is $132.13 billion, up 29.23 percent. The overall volume of all stable coins is now $105.17 billion, accounting for 79.60 percent of the overall 24-hour volume of the crypto market.
Bitcoin’s price is at $32,987.02, and its market share is 41.34 percent, up 0.39 percent from yesterday.