Bitcoin

El Salvador becomes first country to adopt bitcoin as legal tender | El Salvador | The Guardian

el salvador has become the first country in the world to adopt bitcoin as legal tender after its congress approved president nayib bukele’s proposal to adopt the cryptocurrency in an effort to promote “financial inclusion,” the investment and economic development.

bukele, a former mayor of the capital san salvador, a media expert who was elected president in a landslide victory two years ago, is known for his love of technology and his penchant for attention-grabbing stunts .

Reading: Salvador becomes passing law adopt bitcoin

Despite concerns that the move could complicate talks with the IMF, in which El Salvador is seeking a financing program worth more than a billion dollars, the two-page proposal was approved by the congress on Tuesday night with 62 of the 84 votes of the assembly. Congress is controlled by the president’s party and his allies.

The use of cryptocurrency as legal tender, along with the US dollar, will take effect in 90 days and the market will set the bitcoin/dollar exchange rate. Salvadorans will be able to pay their taxes in bitcoin and “every economic agent” will be required to accept cryptocurrency as payment unless they lack access to the necessary technology.

Bukele, 39, had announced the move in a recorded message played at a bitcoin conference in Miami on Saturday.

“this will generate jobs and help provide financial inclusion to thousands outside the formal economy, and in the medium and long term we hope that this small decision can help us push humanity at least a little in the right direction”, bukele said.

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Bukele, a former marketing executive, suggested that bitcoin could make it easier for Salvadorans living abroad to send home remittances that totaled $6 billion in 2019, a fifth of the country’s GDP.

The president, who said the new law “will bring financial inclusion, investment, tourism, innovation and economic development to our country,” had earlier added the pro-cryptocurrency “laser eyes” to his twitter profile picture.

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His enthusiasm, however, is not universally shared.

father josé maria tojeira, director of the human rights institute at the central american university, said that very few salvadorans would have the technical capacity to access bitcoins.

“The decision is quite incomprehensible. it seems more like putting on a show, which is a characteristic of this government: a lot of propaganda, but few structural changes to help the impoverished population,” he said.

david morales, of the human rights group cristosal, called the legislation “political marketing” and contrasted the swiftness of the decision with the government’s refusal to consider legislation to guarantee water rights or reform the country’s draconian abortion laws. El Salvador.

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“It was an idea that the president came up with and it became law in a matter of hours,” he said. “This kind of big decision is made as part of a marketing strategy, rather than having a real national debate.”

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Carlos Carcach, a professor at El Salvador’s Higher School of Economics and Business, noted that bitcoin is extremely volatile, which means investors “run the risk of becoming rich and poor the next day.” but carcah added that although the adoption of cryptocurrency was “neither necessary nor convenient… as long as there is someone who accepts payment with bitcoin, just as they accept dollars, there would be no problems.”

Although Bukele says that around 70% of people in El Salvador lack access to traditional financial services, the use of cryptocurrency for remittances globally is patchy. converting local currencies to and from bitcoin often relies on informal intermediaries, prices are volatile, and buying and selling is a complex process that requires technical knowledge.

Analysts said the Central American country’s experiment would be closely watched elsewhere.

“The market will now focus on adoption across el salvador and whether other nations will follow,” said richard galvin of crypto fund digital asset capital management. “This could be a key catalyst for bitcoin in the next two to three years.”

bukele made headlines around the world in February last year when he led soldiers in combat uniforms to congress and told parliamentarians to approve a loan for new security equipment or they would be summoned back in seven days for another session.

The president’s concentration of power, attacks on critics and open disregard for checks on his power have raised concerns about El Salvador’s path. however, he has a broad base of support thanks, in part, to the failure of the country’s traditional parties that ruled for the last 30 years to improve people’s lives, and their ability to provide short-term benefits. /p>

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