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Jun 10, 2021

El Salvador world’s first country to use Bitcoin as legal currency

Foreign Affairs News Correspondent
Bitcoin Photo: AP file photo
Bitcoin Photo: AP file photo

El Salvador has become the first country in the world to formally adopt cryptocurrency –bitcoin- legal tender after its Parliament voted Wednesday overwhelmingly to approve a law classifying Bitcoin as legal tender

A move that analysts say risks putting its economy at the mercy of the digital currency’s sharp swings, the nation allows bitcoin, the world’s largest cryptocurrency by market value, to be used to buy goods and pay taxes and bank loans. Businesses would be required to accept bitcoin for payment, with the bitcoin-dollar exchange rate set by the market.

El Salvadoran President Nayib Bukele. Getty Image SOPA

Converting bitcoin into other currencies won’t be subject to capital-gains tax, according to the three-page bill that was submitted Tuesday evening and swiftly approved after midnight by lawmakers of President Nayib Bukele’s New Ideas party, which enjoys a supermajority 62 votes out of 84-member Legislative Assembly.

Bukele had announced his plans to introduce a bill adopting Bitcoin as legal tender in El Salvador Saturday, saying a supermajority of legislators in Congress had approved the law in a vote Wednesday. 

Bitcoin is set to become legal tender in 90 days, meaning every business must accept the token for goods and services, alongside the U.S. Dollar. 

 El Salvador has used the U.S. Dollar as official currency since 2001, which Bitcoin will join, not replace.

Following El Salvador’s footsteps, other countries including Brazil and Panama most likely and banks may begin to adopt bitcoin, or other cryptocurrency tokens, in the future.

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