After Congress approved President Nayib Bukele’s request to embrace bitcoin as legal tender, El Salvador has become the first country in the world to do so.
Despite concerns about the potential effects on El Salvador’s IMF program, a majority of MPs voted in favor of the effort to develop a law that will formally adopt Bitcoin with 62 out of 84 available votes. At 1 p.m. IST on June 9, the price of bitcoin was 33569.02 USD.
Bukele has praised Bitcoin for its potential to enable Salvadorans working abroad send remittances home, while simultaneously stating that the US dollar will remain legal cash.
“It will bring financial inclusion, investment, tourism, innovation, and economic prosperity to our country,” Bukele said in a tweet just before the vote in Congress, which he and his allies control.
He went on to say that using Bitcoin, which will be optional, will not pose any danger to users. In 90 days, its use as legal tender will become law.
“The government will ensure that each transaction is converted to the correct value in dollars at the time of transaction,” Bukele stated.
El Salvador’s dollarized economy is primarily reliant on remittances from foreign workers. According to World Bank data, remittances to the country totaled about $6 billion in 2019, making it one of the highest rates in the world.
The switch to Bitcoin, according to experts, could hamper talks with the IMF, where El Salvador is seeking a $1 billion program.