El Salvador Approves Bitcoin as Legal Tender in “Supermajority”
The “Bitcoin Law” has been approved four days after El Salvador’s President Nayib Buekele announced plans to send a law to legislation to make bitcoin legal tender, making it the first country in the world to formally adopt the cryptocurrency.
key takeaways
- El Salvador’s central bank President Douglas Rodriguez said bitcoin is already being used in the country and “it’s not something people need to be afraid of.”
- Other Latin American politicians show support for bitcoin, opening the door for potential new opportunities in neighboring countries
El Salvador President Nayib Bukele tweeted that the “Bitcoin Law” has been approved by a “supermajority” in the El Salvadoran Congress on June 9, making the country the first in the world to formally adopt bitcoin as legal tender.
The 39-year-old President Bukele, who is known to break from the norms, said in the tweet that 62 out of 84 lawmakers voted in favor of the proposal. The country’s legislative assembly also tweeted about the approval of the new law with a matching 62 votes in favor.
Bitcoin as legal tender is only the first step on the way toward central bank digital currencies (CBDCs), according to Roxe Inc. chief business officer Josh Li. “CBDCs will be a major catalyst for making crypto domestic and cross-border payments go mainstream. Why? With the right technology, CBDCs can not only make payments much faster and less expensive, but more interoperable between payment platforms and various financial institutions.” he said in an email to Blockworks on June 9.
At the Bitcoin 2021 conference in Miami last week, President Bukele announced via a video recording that he had plans to send legislation to make bitcoin legal tender in El Salvador.
“In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” President Bukele said in the video on June 5.
Additionally, El Salvador’s central bank President Douglas Rodriguez said in an interview with state TV on June 8 that bitcoin is already being used in the country and “it’s not something people need to be afraid of,” but also said it won’t replace the US dollar.
The official document President Bukele presented to The Legislative Assembly of The Republic of El Salvador said, “In order to promote economic growth of the nation, it is necessary to authorize the circulation of a digital currency whose value answers exclusively to free-market criteria, in order to increase national wealth for the benefit of the greatest number of inhabitants.”
The exchange rate between bitcoin and the US dollar will be freely established by the market, prices may be expressed in bitcoin and tax contributions can be paid in bitcoin, the legal document stated.
The law will take effect 90 days after its publication in the official gazette, the document said. There has been no official announcement on whether the newly approved law has been published in the gazette yet, however most gazettes are published every business day.
Latin America goes crypto
While El Salvador makes it official, other countries in Latin America are sharing similar support for the adoption of bitcoin as a legal tender, too.
Politicians from Brazil, Paraguay, Panama, Argentina and Mexico have expressed interest and support for the cryptocurrency.
A day after President Bukele’s video announcement for bitcoin legislation was broadcasted, Paraguayan Congressman Carlitos Rejala joined in as the first Latin American politician to express interest in adopting cryptocurrency after El Salvador.
Rejala said in a tweet, “As I was saying a long time ago, our country needs to advance hand in hand with the new generation.” And then he said, “This week we start with an important project to innovate Paraguay in front of the world!”
The tweet was attached with a photo of Rejala with photoshopped laser eyes, indicating support for bitcoin.
Additionally, in a direct response to President Bukele’s tweets on June 7, Panamanian Congressman Gabriel Silva said, “This is important. And Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub, we have to support cryptocurrencies.”
Congressman Silva added, “we will be preparing a proposal to present at the assembly,” but did not disclose details further.
Fabio Ostermann, a State Deputy for Rio Grande do Sul of Brazil, and Federal Deputy of Brazil, Gilson Marques and Senator Indira Kempis of Mexico City also posted pictures of themselves with laser eyes, indicating their independent support for bitcoin.
Iranian opposition to digital assets
Further away from Latin America, in the Middle East, Iranian President Hassan Rouhani took a different stance in regards to digital assets. Instead of sharing support, President Rouhani discussed the need to preserve and protect national interests in regards to activities in the field of digital currency and cryptocurrencies.
On June 8, President Rouhani said the risks of cryptocurrency trading must be considered and said, “For legalizing the activity of cryptocurrencies and protecting people’s capital in this area, we must think of a solution as soon as possible and lay down and communicate the necessary laws and instructions.”
He also said, “The mining of cryptocurrencies is strictly prohibited until the end of summer, and the Ministries of Communication and Information Technology and Energy are responsible for cutting off power to these centres.”
In May, the country’s ministry of energy said due to increased domestic electricity use during the hot summers there is a nationwide ban on crypto mining until September and that crypto mining with civilian household electricity is not legal and home miners would pay heavy fines if discovered.
