El Salvador Makes Bitcoin ‘Legal Tender’

El Salvador Makes Bitcoin ‘Legal Tender’

June 10, 2021

El Salvador became the first country in the world to formally accept a cryptocurrency, when its congress passed a bill approving bitcoin as legal tender.

Nayib Bukele, El Salvador's president, backed the law, predicting in a tweet after its passage that the digital currency "will bring financial inclusion, investment, tourism, innovation and economic development for our country." The bill won 62 of 84 possible votes.

What the move means for digital commerce in the long run is unclear. If more nations add cryptocurrency as legal tender it could change the way the payment method is regulated and could make it more attractive as a global online payment method. In many places it is regulated as an asset, not a transactional currency. But, there seems to be momentum toward greater acceptance of cryptocurrency as a medium of online exchange.

A recent Mastercard report found that younger consumers are especially open to alternative payment methods that include bitcoin and other cryptocurrencies. Sixty-seven percent of millennials polled by Mastercard reported they will use a digital currency in the next year.

Making bitcoin "legal tender" means shops and businesses must accept it for goods and services, and they can choose to express prices in the currency. El Salvadoran citizens can also opt to pay taxes using bitcoin. The government said the bitcoin-dollar exchange rate will be set by markets.

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