Lawmakers in El Salvador have passed a law to increase the country’s official currency after the nation’s President, Nayib Bukele, asked that bitcoin be adopted for payment.
The legislature voted to make bitcoin it’s legal tender in order to improve the country’s financial situation. This decision makes El Salvador the first country to legalise cryptocurrency.
El Salvador now has two official currency: US dollar and bitcoin – having changed its tender from Salvadoran colon to dollar in 2001 – both of which can be used by the 6.5 million citizens of the country.
With the adoption, businesses in the Central American will automatically become investors in the bitcoin community. Companies are now authorised to receive bitcoin as form of payment for goods and services.
The country is having remittance problem, and President Bukele believes the acceptance of bitcoin will grow capital inflow into El Salvador which has major international oil trade ties with Saudi Arabia and Qatar, and attracts tourism.
Note that since El Salvador changed its currency to that of US dollar twenty years ago, the country has handed over currency supply and interest rates authority to the US Federal Reserves.
The adoption of dollar hasn’t improved El Salvador’s economy as initially believed before its colon was replaced. With the acceptance of bitcoin, the country’s government is betting on the crypto to give the financial growth it desires.