El Salvador becomes first country to adopt Bitcoin as legal tender

El Salvador, a country in Central America, has officially recognised Bitcoin as a form of legal tender.

On Wednesday, lawmakers in the country voted in favour of a law proposed by El Salvador President Nayib Bukele for the Latin American nation to adopt Bitcoin.

Although three members of the legislature were absent during the exercise, 19 lawmakers opposed the bill, while 62 members voted in its favour.

#Btc🇸🇻 https://t.co/x5r0Td6SiQ

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— Nayib Bukele (@nayibbukele) June 9, 2021

Bukele said the new law will drive financial inclusion as an estimated 70 percent of the country’s population does not have access to traditional financial services.

The new law states that all economic agents shall accept bitcoin as a form of payment when it is offered by the purchaser of a good or service.

It also notes that tax payments can now be made in bitcoin.

“The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out,” the law reads.

“The exchange rate between bitcoin and the United States dollar, subsequently USD, will be freely established by the market.

“Prices may be expressed in bitcoin. Tax contributions can be paid in bitcoin. Exchanges in bitcoin will not be subject to capital gains tax, just like any legal tender.

“For accounting purposes, the USD will be used as the reference currency. Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.

“Without prejudice to the actions of the private sector, the State shall provide alternatives that allow the user to carry out transactions in bitcoin and have automatic and instant convertibility from bitcoin to USD if they wish.

“Furthermore, the State will promote the necessary training and mechanisms so that the population can access bitcoin transactions.”

According to the World Bank, El Salvador has a population of 6.4 million (plus over 1.5 million Salvadorians living abroad) and is one of the most densely populated countries, ranking in the 83rd percentile worldwide in terms of population density.

While El Salvador has recorded history by becoming the first country to adopt Bitcoin as a legal tender, many countries have continued to take actions against cryptocurrencies.

In May, the Chinese government pledged to crack down on Bitcoin mining and trading.

Over the weekend, Weibo, a Chinese microblogging platform similar to Twitter, blocked various accounts linked to cryptocurrency.

In Nigeria, the Central Bank of Nigeria (CBN) had consistently warned over trading in crypto and issued a directive to banks to close accounts of persons or entities involved in cryptocurrency transactions.