El Salvador on Wednesday, 9 June, officially recognised bitcoin as legal tender, making the Central American nation the first in the world to do so.
El Salvador also announced that people who invest in bitcoin there will get the country's citizenship. “People investing three bitcoins in country's economy will be given citizenship by the government,” he said.
Earlier, on Tuesday, a supermajority of the nation’s legislature voted in favor of President Nayib Bukele’s proposal for the Latin American nation to adopt bitcoin.
"The #BitcoinLaw has just been approved by a qualified majority in the legislative assembly," President Nayib Bukele tweeted after the vote in the assembly.
‘Use of Bitcoin To Be Optional’
Meanwhile, Bukele clarified that the US Dollar will also continue as legal tender and the use of bitcoin will be optional, adding that it would not bring risk to users.
“The government will guarantee the convertibility to the exact value in dollars at the moment of each transaction,” Bukele said.
The development comes as a major boost for crypto enthusiasts, however, it is worth noting that one of the reasons why El Salvador is able to make bitcoin a legal tender is because the country doesn’t have its own currency. The country currently uses the US dollar as the official currency.
El Salvador has said that the exchange rates with the US dollar “will be freely established by the market.”
‘Govt Will Exchange Bitcoins for Dollars’
Citing an example on how the government will help in converting the bitcoin to dollars, Bukele in a Twitter space conversation said, “If there’s an ice cream parlor, the owner does not accept bitcoin because the owner doesn’t want to take the risk of convertibility, and he wants dollars deposited in his banking account, when he sells the ice cream. From now onwards, he can ask the government to exchange his bitcoin to dollars.”
It is expected that government officials from El Salvador will meet with the International Monetary Fund in the coming days to discuss the plan. It is worth noting that El Salvador government may promote bitcoin mining as well.
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