El Salvador officially accepts Bitcoin as legal tender starting September 7, 2021. Bitcoin becomes the country's official currency in order to be a potential relief for the local economy in need of recovery.
Bitcoin became the legal tender in El Salvador as a result of the adoption of the relevant law by the country's parliament. In early June, President Nayib Bukele announced that he would sign the document in the near future, after which it would "immediately" come into force. 90 days will be given to create infrastructure for cryptocurrency payments. Acceptance of Bitcoin for payment will become mandatory in the country and cryptocurrency will be legal tender along with the US dollar.
The use of Bitcoin will be optional. Anyone who receives payment will be able to choose to receive it in Bitcoin or dollars. Pensions and wages will continue to be paid in US dollars. “The use of Bitcoin will be optional, and nobody will receive Bitcoin if they don’t want it… If someone receives payment in Bitcoin, they can choose to automatically receive it in dollars,” said the president.
At the same time, the country's businesses will accept Bitcoin to pay for goods and services, and citizens will be able to choose to pay their taxes in cryptocurrency. The move intends to bring potential relief to the local economy in need of recovery. The country's population is 6.5 million, of which more than 2 million live abroad and continue to send money home. Because of this, more than 20% of the country's gross domestic product (GDP) is made up of remittances. El Salvador is in the top 5 largest recipients in 2020.
Adopting Bitcoin as the official currency will bypass expensive and slow traditional money transfer firms, and open up financial services to 70% of the country's citizens who do not have a bank account. Bukele has pledged to develop the necessary infrastructure, including creating a Bitcoin wallet called Chivo, while offering $30 worth of cryptocurrency to citizens who download and sign up.
Athena Bitcoin announced a $1 million investment to install 1,500 cryptocurrency ATMs across the country, focusing on regions where residents receive remittances from abroad. Such measures will allow for instant transformations, while guaranteeing freedom of choice in terms of payment options.
© 2021, Eva Fox. All rights reserved.
We appreciate your readership! Please share your thoughts in the comment section below.
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.