El Salvador became the first country in the world to make the bitcoin cryptocurrency a legal tender in the Central America country after its Congress on June 9 approved a bill to approve it.
Its adoption as legal tender will go into law in 90 days.
President Nayib Bukele had announced that he would send a bill to Congress next week to make the bitcoin cryptocurrency a legal tender in the Central American country, in what will be a world first, IANS said.
Bukele announced this in a recorded message played at a Bitcoin conference in Miami on Saturday, PTI said. The 39-year-old president, who has maintained approval ratings above 90 percent and made Twitter his preferred way of communicating, characterized it as an idea that could help El Salvador move forward.
He reasoned that: "In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy and in the medium and long term we hope that this small decision can help us push humanity at least a tiny bit into the right direction.”
El Salvador has two official forms of money as legal tender
El Salvador has two official forms of money in its local system already – locally issued colons and US dollars. According to CoinDesk, though both are good for all debts, public and private, one local bitcoiner told CoinDesk, Salvadorans use dollars for commerce and colons as 'table ornaments.'
The US dollar is El Salvador's official currency. About one quarter of El Salvador's citizens live in the United States and last year, despite the pandemic, they sent home more than $6 billion in remittances.
Bukele's New Ideas party holds a supermajority in the new congress seated May 1, giving any legislative proposal from the president a strong likelihood of passage.
Bukele in subsequent messages on Twitter noted that Bitcoin could be “the fastest growing way to transfer 6 billion dollars a year in remittances.” He said that a big chunk of those money transfers were currently lost to intermediaries and with Bitcoin more than a million low-income families could benefit.
He also said 70 percent of El Salvador's population does not have a bank account and works in the informal economy. Bitcoin could improve financial inclusion, he said.
Hailing the decision of the Central American country, Avinash Shekhar, Co-CEO, ZebPay, said: "This is a historic moment. The code (Bitcoin) Satoshi wrote is now a legal tender of a country. Bitcoin is the soundest asset and one of the biggest technological innovations the world has ever seen. We are looking forward to how El Salvador incorporates Bitcoin into its economy.”
(With inputs from agencies)