El Salvador legalizes bitcoin as a means of payment

For the first time in the world, the state has accepted Bitcoin as a payment method. This bill was adopted in a small country in terms of population – El Salvador. In just three months, the country’s infrastructure will allow you to legally pay with Bitcoin and officially accept payments in cryptocurrency, in addition, tax deductions will be made in BTC. However, no tax will be charged for the increase in the value of the cryptocurrency, at the same time, the exchange of Bitcoins will be carried out exclusively at the market rate.

Republic of El Salvador

El Salvador is a small country in Central America bordering Honduras and Guatemala. The territory of the country is only 21,400 km², and the population does not exceed 6.5 million people. In fact, El Salvador is the smallest, but at the same time densely populated country in Central America.

National currency of El Salvador

• From the 30s of the last century, until the year 2000, the national currency in the country was the so-called "Salvadoran Colon", which was named after Christopher Columbus.
• Since 2001, the columns were gradually withdrawn from the circulation of the National Bank, and when the American dollar came into play, the exchange rate to the column was 1=8.75.
• In 2021, Bitcoin in Salvatore will be legalized on a par with the national currency – the US dollar. The legalization of Bitcoin obliges all institutions, enterprises, organizations, etc. to accept cryptocurrency. The US dollar will continue to play the role of the base currency in accounting, Bitcoin will be a secondary link here.

Prerequisites for the adoption of Bitcoin at the national level

The President of El Salvador announced a little earlier that he promised to make Bitcoin the National means of payment, the decision remained only with the Parliament.

Nayib Bukele said that the recognition of Bitcoin could restore the local economy and facilitate the transfer of means of payment to their homeland for those citizens of El Salvador who work outside their own country. The legalization of cryptocurrency, according to the president, will attract a much larger number of the population of the state to the financial structure. The President justified this by the fact that about 70% of the country’s inhabitants adhere to the “shadow economy”, and the adoption of Bitcoin will provide citizens with access to all possible financial transactions, from loans to investments.

Legalization of Bitcoin in El Salvador

The Parliament of El Salvador passed a law on the adoption of Bitcoin as an official means of payment. This innovation will certainly come into force from the moment the relevant document is signed by President Nayib Bukele. After that, 3 months will be allocated for the infrastructure of El Salvador to adapt to payments in Bitcoins. The President of the country also believes that these manipulations will help provide the state with new jobs.

Official Bitcoin Wallet El Salvador

The government of the country has said that it will create its official Bitcoin wallet based on the Development Bank of El Salvador, which will contain the declared $ 150 million. All this in order to create the opportunity to transfer Bitcoin to dollars as quickly and automatically as possible.

Consequences of the legalization of Bitcoin in El Salvador

On the very first day that the Republic of Sadvador announced the law on the adoption of Bitcoin as a means of payment, the price of Bitcoin rose by 5%. It took only 3 hours to raise the value of the cryptocurrency on the Binance exchange: the Bitcoin rate approached the mark of 34.5 thousand dollars, and the capitalization grew to 643 billion dollars (according to CoinGecko).

See also: Introduction of crypto-currency regulatory framework in Iran at the initiative of the President