El Salvador’s congress enacted legislation on Wednesday that makes bitcoin legal tender, making it the first country in the world to do so.
The vote by the parliamentary assembly fulfils President Nayib Bukele’s vow to present the measure over the weekend, allowing the cryptocurrency to be used for all kinds of payment in the Central American country, including taxes.
In a video displayed at the Bitcoin 2021 conference in Miami on Saturday and posted to his Twitter account. Bukele said that in a short while, this move will produce jobs and help financial inclusion to those outside the formal division.
He further added that in the medium and long term, they hope that this minor move will assist them in moving humankind in the correct path at least.
— Nayib Bukele 🇸🇻 (@nayibbukele) June 9, 2021
El Salvador’s national currency is the US dollar. Despite the COVID-19 pandemic, almost a 4th of El Salvador’s inhabitants lives in the United States, and they sent home more than $6 billion in remittances last year.
Con 62 votos, el pleno legislativo aprueba la #LeyBitcoin con la que El Salvador adopta el #Bitcoin como moneda de circulación legal.
¡#LaNuevaAsamblea sigue haciendo historia! pic.twitter.com/Ur9OQzPvYI
— Asamblea Legislativa (@AsambleaSV) June 9, 2021
Bukele went on to say that bitcoin might be the fastest growing mechanism to send those remittances in later tweets. He claims that a large portion of those money transactions is currently lost to intermediaries, and that bitcoin may benefit over a million low-income families.
He also stated that 70% of the population of El Salvador does not have a bank account and works in the informal economy. President Bukele strongly believes that Bitcoin has the ability to increase financial enclosure.
Bukele added that this inclusion will enhance millions of people’s lives and their futures. He is calling the action a moral imperative.
Prices can be published in both US currency and bitcoin amounts across the country as a result of the legislation. The US dollar will continue to be the reference currency, and bitcoin exchange rates will be established by the free market.
Bitcoin is still trying to rebound from a month of market losses in May that totalled almost 40%, the lowest monthly performance since September 2011.
Its decline was sparked by China’s attempt to crack down on cryptocurrency mining and trading, as well as Tesla’s decision to cease payments due to environmental worries about the energy used to mine it.
Nonetheless, proponents of Bitcoin have applauded El Salvador’s decision.
Bukele was assisted in delivering his message to the Miami conference by Jack Mallers, the founder and CEO of mobile payment app Strike, which launched in the country in March. Mallers also hailed the bill’s passage on Twitter.
Bukele has centralized power, thanks to his 90% popularity and his party’s domination in the Feb. 28 elections. His party’s congressional supermajority dismissed the Supreme Court’s Constitutional Chamber judges on May 1. The attorney general was thereafter replaced.
They had criticized some of Bukele’s more extreme tactics during the pandemic, such as a mandatory stay-at-home order and detention centres for individuals who disobeyed the policy.
While Bukele has a strong relationship with former US President Donald Trump, he has a tense relationship with President Joe Biden’s government.
Last month during a visit to El Salvador, the White House Envoy for the Northern Triangle Ricardo Zuniga said that the United States government would like to see El Salvador withdraw its actions against the court and the attorney general. But according to President Bukele, he is against such withdrawals.
Bukele’accumulation of authority, assault on critics, and obvious contempt for balances on his power have raised questions about El Salvador’s direction. Bukele, on the other hand, has a large base of support, owing to the country’s conventional parties’ complete failure to improve people’s lives over the past 30 years, as well as his capacity to give short-term benefits.
Bukele has been lauded for pursuing COVID-19 vaccinations aggressively and implementing an effective vaccination program that outperforms El Salvador’s neighbours.