With 64 out of 84 votes in favor, the Salvadoran Congress makes cryptocurrency a formally recognized currency. The goal is to create new jobs.
El Salvador officially enters history. The Central American country is in fact the first in the world to have formally recognized Bitcoins as a real currency, effectively giving a whole new dimension to the famous cryptocurrency.
If the hacker group Anonymous recently threatened Elon Musk over the tycoon’s policy towards Botcoins, the bill presented by President Nayib Bukele goes against the grain and launches the República de El Salvador among the pioneers of our time. “The #BitcoinLaw has just been approved by a qualified majority by the Assembly,” the Salvadoran head of state wrote on Twitter immediately after the vote. Of course, Bitcoin will be placed side by side for all intents and purposes with the U.S. dollar already in use, but an interesting fact to note is that the legislative proposal was approved by a super majority in Congress, with 64 votes in favor out of 84.
The intention to make the circulation of cryptocurrency legal in El Salvador had already been anticipated a few days ago by Bukele in a video message broadcast during the Bitcoin 2021 conference in Miami, Florida. In a surprisingly short time, the bill was transmitted and debated in the Finance Commission of the National Assembly, only to be immediately approved without debate by the Parliament largely controlled by the parties that support the current president. With this move, the country aims to enable the financial inclusion of thousands of people who are outside the legal economy,” but according to the politician it could also foster job creation in a nation where “70 percent of the population does not have a bank account or works in the underground economy.”
Not only that, again for Nayib Bukele, Bitcoins have been “the fastest growing way to transfer billions of dollars in remittances and prevent millions from being lost to middlemen.” According to data released by some local economic newspapers, remittances from Salvadorans working abroad account for 22% of the country’s total GDP.
According to the new law, the use of Bitcoins in El Salvador will be “free with liberating power, unlimited in any transaction and in any capacity requested by public or private natural or legal persons.” It is then envisaged that the exchange rate between Bitcoin and the dollar will be set freely by the market, that prices can be expressed in Bitcoin, and that all taxes and fees can also be paid with the cryptocurrency. As if that wasn’t enough, it has been expressly clarified that exchanges made with cryptocurrency will not be subject to capital gains tax as is the case with any other legal tender currency.
Andrea Guerriero