On Saturday, June 5, President Nayib Bukele announces that he will propose a legal reform that would make Bitcoin a legal tender within the country. If the bill is approved, El Salvador would be the first nation on the globe to officially adopt this cryptocurrency.
“The adoption of the digital currency bitcoin will lead the country to adopt new financial technologies for the future,” said president Bukele in a video broadcast during a Bitcoin event.
According to president Bukele, the use of bitcoins will allow greater financial inclusion in the country.
“This currency has a market capitalization of $680 billion; if 1% is invested in El Salvador, that would increase El Salvador’s gross domestic product (GDP) by 25%. On the other side, Bitcoin will have 10 million potential new users and the fastest growing way to transfer 6 billion dollars a year in remittances,”
The president also pointed out that about 70% of the Salvadoran population does not have a bank account and works in the informal sector. “Financial inclusion is not only a moral imperative but also a way to grow the country’s economy. It will provide access to credit, savings, investments, and secure transactions,” added Bukele.
It is almost guaranteed that the president’s proposal will be approved, therefore setting a milestone in the world’s monetary history.
“Despite El Salvador’s small size, Bukele’s effort is a major milestone in monetary policy history. One with significant ramifications for the global financial system,” wrote Avik Roy in a
Accepting Bitcoin as legal tender would give Salvadorans living abroad another option of sending money back home. Also, it would help the economy by getting some of the massive Bitcoin revenue circulating worldwide.
No official government currently recognizes Bitcoin as legal tender; however, there are ways to use the cryptocurrency. Users can exchange it between themselves or use a third-party service to convert it into a currency, such as the US dollar.
“We hope that this decision will be just the beginning in providing a space where some of the leading innovators can reimagine the future of finance. Potentially helping billions around the world,” concluded president Bukele.