El Salvador proposes a law to make bitcoin legal tender
Nayib Bukele, President of El Salvador, delivers a speech to Congress in the Legislative Assembly building in San Salvador, El Salvador, Tuesday, June 1, 2021. Photographer: Camilo Freedman / Bloomberg via Getty Images
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Salvadoran President Nayib Bukele has sent a law to the country’s congress proposing to make bitcoin legal tender.
If approved by the legislature, El Salvador would become the first nation in the world to give cryptocurrency this status.
Bukele posted a screenshot of the “Bitcoin Law” in a tweet on Wednesday.
“The purpose of this law is to regulate bitcoin as unlimited legal tender with liberating power, unlimited in any transaction, and in any capacity that natural or legal persons, public or private, require to carry out,” the law indicates.
If the law is passed, prices can be displayed in bitcoin, tax contributions can be paid with digital currency, and bitcoin exchanges will not be subject to capital gains tax.
Bitcoin is known for wild price fluctuations who have prompted critics to suggest that it is not suitable to be an efficient currency. It is still unclear how El Salvador will ultimately roll out bitcoin as legal tender.
The exchange rate with the US dollar “will be freely established by the market”, according to the bill. The current official currency of El Salvador is the US dollar.
The law also states that the state “will promote the training and mechanisms necessary for the population to access bitcoin transactions.”
About 70% of El Salvador does not have access to traditional financial services, according to the Bitcoin law. Cryptocurrency is seen as a way to increase financial inclusion.
The proposal will have to go through El Salvador’s legislative process before being passed into law.
Bukele’s decision to bring the law to Congress comes after he announced last week that El Salvador has partnered with digital wallet company Strike, to build the country’s modern financial infrastructure using Bitcoin technology.
In April, bitcoins hit a record high of $ 64,829.14, but has since fallen by nearly half, according to data from CoinDesk. It is still up over 230% over the past 12 months. This increase has been attributed to a number of factors, including growing interest from institutional investors and large companies such as You’re here and Square buy bitcoins.