In an attempt to become the world’s first nation to do so, El Salvador is seeking to adopt Bitcoin as an actual legal tender.
Nayib Bukele, the President of El Salvador, issued the statement announcing that he would be submitting a bill with his backing to the Salvadoran legislature, which is currently controlled by his “Nuevas Ideas” party and should show support. The new bill seeks to make bitcoin a valid and governmentally accepted medium of exchange within the Central American nation.
A popular cryptocurrency, bitcoin is not managed by a centralized government nor is it tied to a known commodity for its value such as gold or silver. The currency is transmitted completely digitally and protected from counterfeiting via strong encryption.
“Next week, I will send to Congress a bill that will make bitcoin a legal tender in El Salvador,” stated Bukele in a video that debuted at the 2021 conference for Bitcoin held in Miami. “This will generate jobs and help provide financial inclusion to thousands outside the formal economy.”
— Nayib Bukele 🇸🇻 (@nayibbukele) June 5, 2021
In addition to this landmark announcement, Bukele went on to say that the nation would not be charging any capital gains taxes on bitcoin and it will be offering “immediate permanent residence for crypto entrepreneurs.”
1. Great weather, world class surfing beaches, beach front properties for sale.
2. One of the few countries in the world with no property tax.
3. No capital gains tax for #Bitcoin, since it will be a legal currency.
4. Immediate permanent residence for crypto entrepreneurs. https://t.co/j3eugJQCMd
— Nayib Bukele 🇸🇻 (@nayibbukele) June 6, 2021
There are only a few countries that currently use the United States dollar as their current official currency, they are El Salvador, Ecuador, and the Federated States of Micronesia. Other countries set the value of their own official currencies against the dollar. If this bill makes it through the judicial system and goes live, El Salvador plans to continue to use the U.S. dollar alongside bitcoin.
The CEO of bitcoin wallet company Zap, Jack Mallers, issued a statement during the conference that his company had been working on improving El Salvador’s GDP “in real-time” by allowing and helping the countries citizens join the platform.
“Over 70% of the active population in El Salvador doesn’t have a bank account,” detailed Mallers. “They’re not in the financial system. They had a huge problem of financial inclusivity and providing their citizens with basic human freedom.”
Currently, as much as 20% of the entire economic activity in El Salvador stems from remittances, or money sent back by migrant workers, out of the country, that is quite often subject to immense international transfer fees. Mallers went on to say that the use of bitcoin would allow the Salvadorans to keep even more of their wages for their families.
Currently, the price of bitcoin is about $33,000 USD. The online coin went for around $53,000 USD back in April.