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El Salvador on Wednesday officially became the first country to adopt bitcoin as legal tender.
President Nayib Bukele announced on Twitter just after 2 a.m. ET that the Central American country’s legislative body voted in favor of the so-called Bitcoin Law — making the digital currency the nation’s official legal tender, along with the US Dollar.
The law received 62 out of 84 votes, according to Bukele, Latin America’s youngest president.
“The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out,” the law reads.
That means prices for goods and services across the country can now be shown in bitcoin, taxes can be paid with the crypto, and transactions in bitcoin will not be subject to capital gains tax, the law says.
Bitcoin was last seen trading about 3 percent higher, at almost $34,200 per coin.
It’s still unclear exactly how El Salvador will roll out the use of bitcoin, which is known for its extremely volatile prices, as legal tender.
The exchange rate with the US dollar “will be freely established by the market,” the law says.
The state will “promote the necessary training and mechanisms so that the population can access bitcoin transactions,” according to the law.
The passage of the law comes after Bukele announced last week that El Salvador has struck a partnership with digital wallet company Strike to build the country’s new financial infrastructure.
Jack Mallers, founder and CEO of Strike, has called the adoption of bitcoin by El Salvador the “shot heard ’round the world for bitcoin.”
Bukele revealed himself as a bitcoin enthusiast last week, announcing at the Bitcoin 2021 conference in Miami that he would introduce the bill to make the crypto legal tender in El Salvador.
The 39-year-old president changed his profile picture on Twitter shortly after the announcement to show so-called laser eyes, which have become something of a signal on social media used by bitcoin supporters.
In announcing his plans for the country’s currency, Bukele has noted that bitcoin could be “the fastest growing way to transfer six billion dollars a year in remittances.”
The US Dollar is currently El Salvador’s other official currency. About a quarter of El Salvador’s citizens live in the US and last year, they sent home more than $6 billion in remittances.
Bukele has said a chunk of those transfers are currently lost to intermediaries, and that more than a million poor families could benefit from the use of bitcoin.
He’s added that 70 percent of people in El Salvador don’t have a bank account and operate outside of formal financial infrastructure. Bitcoin could give those people access to the country’s financial systems, he’s said.
He’s also said that his government will give “immediate permanent residence to crypto entrepreneurs,” prompting several fellow bitcoin enthusiasts to say on Twitter they were considering such a move.
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