El Salvador on 9th June made Bitcoin legal in their Country. It is the first country in the world to legalize the cryptocurrency. The law kept forward by the 39year old President Nayib Bukele was passed after it received 62 votes out of 84 votes. This law gives value to the digital currency just like the country’s main currency the US dollar.
According to the law, bitcoin must be accepted by the entities when offered as the payment for goods and services .Tax payments can also be made through the cryptocurrency. The dollar will be the dominant currency in the country while Bitcoin will also exist by the side.
In 2001, El Salvador completely dollarized its economy. It has no monetary policy of its own, it is linked to the monetary policies of the Federal Reserve in Washington.
The move was taken to stabilize and revive the economy and bring growth to the country. According the World Bank data, Remittances make up about $6 billion in 2019 which is about 20% of the El Salvador’s GDP (one of the highest ratios in the world).
Mr.Bukele said, through enabling transaction via bitcoins El Salvadorians could save transaction fee on banks and agencies. He also stated that the government would protect people from volatility of bitcoin prices by guaranteeing convertibility to dollars. In concern to Carbon footprint, he said he has asked the state-owned geo thermal electric company La Geo to connect renewable energy from the country’s volcano to the bitcoin facilities. The legal tender with bitcoin-dollar exchange rates set by the market will begin in 90 days. El Salvador will promote training and mechanism stated the law.
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