El Salvador becomes the first country to approve Bitcoin as legal tender
Just a few days after President Nayib Bukele put forward a proposal at the Bitcoin conference, the El Salvadoran Legislative Assembly approved legislation to make the country’s cryptocurrency Bitcoin a legal tender. This is the first of its kind. Country of doing.
Digital currency can be used for any transaction, and any company must accept Bitcoin as a payment, except for those lacking relevant technology. According to legislation approved later on Tuesday, the U.S. dollar will also continue to be the currency of El Salvador, and no one will be forced to pay in Bitcoin.
The exchange rate between the two currencies will be determined by the market, and all prices can be expressed in Bitcoin-although for accounting purposes, the U.S. dollar will continue to be the reference currency.
The government will promote training people to be able to use Bitcoin for transactions.
The Ministry of Economy pointed out that 70% of Salvadorans do not have access to traditional financial services, and stated that the country “needs to authorize the circulation of digital currency [whose] Whose value fully complies with free market standards” to stimulate growth.
“Bitcoin law is ambitious, but simple,” Booker said on Twitter. “In addition, for those who don’t want to take risks, the zero-risk structure is good. The government will guarantee that it can be converted into US dollars at the time of the transaction.”
The President stated that this will increase financial inclusion, investment, tourism, innovation and economic development.
The law will take effect 90 days after it is officially announced. The central bank and financial system regulators will announce implementation rules during this period.
Booker’s New Thought Party held an absolute majority in the new Congress on May 1.
Other countries in the region, including Venezuela and the Bahamas, have introduced digital currencies, although no country has adopted the original cryptocurrency Bitcoin itself.
The opposition lacks research on the bill
Bitcoin is designed to replace government-backed currencies and is mainly based on complex mathematics, data scrambling cryptography-hence the name “cryptocurrency”-a large amount of processing power and a distributed global ledger called a blockchain. It records all transactions. No central bank or other institution has any say in its value. It is entirely determined by the people who trade Bitcoin and fluctuates drastically over time.
The legislation established a government trust fund to guarantee the automatic exchange of U.S. dollars.
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Carlos Carcah, a professor at El Salvador’s Advanced School of Economics and Business, believes that the adoption of Bitcoin as legal tender is “unnecessary and inconvenient”, although he added that “as long as someone accepts Bitcoin as payment, just like they accept U.S. dollars, there will be no problem. .”
He pointed out that Bitcoin is extremely volatile, so investors “risk the risk of becoming rich and becoming poor the next day.”
Rodrigo Avila, an opposition member of the conservative Arena Party, complained that the Legislative Assembly did not fully discuss the legislation before it was passed. There is no testimony from economic or cybercrime experts.
This action brought back memories of the decision to dollarize the economy of El Salvador on November 30, 2000, which was made in the middle of the night by the Arena-controlled Congress.
El Salvador received approximately US$6 billion in remittances from Salvadorans living abroad last year, accounting for approximately 16% of the country’s GDP. Bukele has stated that Bitcoin can eliminate the cost of sending money home.