While some countries are outright banning the use of cryptocurrencies, El Salvador has passed a new legislation that grants bitcoin legal tender status.
Indeed, the use of digital currencies has become a polarized debate: while Inner Mongolia and other Chinese regions strongly crack down on the use and mining of bitcoin, El Salvador’s congress has approved the cryptocurrency to be used as a legal tender. Congress on Tuesday accepted the proposal from the country’s president, Nayib Bukele, making the Central American nation the first of its kind to formally embrace the use of bitcoin.
Bukele has been a long proponent of bitcoin, as it can make it easier for Salvadorians residing abroad to send financial aid to their families back home. “It will bring financial inclusion, investment, tourism, innovation and economic development for our country,” the president said in a tweet following the majority vote. “The government will guarantee the convertibility to the exact value in dollars at the moment of each transaction,” he added.
El Salvador, which has a dollarized economy, is heavily dependent on financial subsidies sent back from Salvadorians living abroad. According to World Bank data, remittances to the Central American country amount to almost $6 billion dollars, accounting for approximately one-fifth of GDP in 2019.
Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.