Mere days after it announced that it was looking forward to making Bitcoin, the popular cryptocurrency, as “legal tender,” El Salvador created history by becoming the first sovereign nation in the world to actually follow through and have Bitcoin as legal currency alongside the US dollar, after the El Salvador Congress approving the bill, which secured 62 out of 84 votes.
If that wasn’t enough, El Salvador President Nayib Bukele took to Twitter to announce further incentives for individuals dealing with the popular cryptocurrency, announcing that those who invest three Bitcoin in El Salvador’s largely cash economy would be granted citizenship by the government. He added that there will not be any capital gains tax on Bitcoin, further enticing individuals to invest in Bitcoin in the country. Bukele also offered permanent residence for crypto entrepreneurs in El Salvador.
“It will bring financial inclusion, investment, tourism, innovation, and economic development for our country,” Bukele said in a tweet. “The government will guarantee the convertibility to the exact value in dollars at the moment of each transaction,” the President added.
While the use of Bitcoin will be encouraged, it will not bring any risks to the users, and its use as legal tender will go into law in 90 days.
According to the law, Bitcoin will be regulated 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. It is also said that the State would “promote the necessary training and mechanisms so that the population can access bitcoin transactions.”
From now on, citizens of El Salvador will be able to view prices in Bitcoin, as well as be able to pay taxes with it. Undoubtedly, this is a cause of elation for the crypto industry and is a welcome change from the reception of other countries towards the most popular cryptocurrency in the world, especially India, but it is now warming up to the idea of trading Bitcoin.
However, it might take time for the same to happen in other countries since El Salvador’s dependency on the US dollar as the official currency is one of the reasons why this move was successful. Considering the fact that remittances to the country count for nearly $6 billion or around a fifth of the Central American country’s GDP (till 2019), it seems unlikely that such a move would be seen in the near future in other countries.
“El Salvador’s decision to embrace crypto is big news for the entire crypto ecosystem. Financial inclusion is the ethos behind crypto, and introducing it in the system will help bank the unbanked in developing countries like El Salvador. While this news didn’t have a gigantic impact on Bitcoin prices, it will have a large impact in the long run. El Salvador has a GDP of $27 billion, and as more of its people adopt crypto, this will push more countries towards crypto acceptance.” Nischal Shetty, CEO WazirX and Member of Blockchain and Crypto Assets Council (BACC) set under the aegis of the Internet and Mobile Association of India (IAMAI), said.