El Salvador turns cryptocurrency into fiat currency

A man standing in his store accepting Bitcoin for payment

This move means that Bitcoin, along with the US dollar, will be accepted by goods and services everywhere.

El Salvador has become the first country in the world to officially classify Bitcoin as legal tender.

Parliament approved President Nayib Bukele’s proposal to accept cryptocurrencies with 62 out of 84 votes on Tuesday night.

The president said the government made history and said the move would make it easier for Salvadorans living abroad to send money back home.

Bitcoin will become fiat currency alongside the US dollar within 90 days.

The new law means that all companies will need to accept Bitcoin as fiat currency for goods and services, unless they can provide the technology they need to trade.

“It will bring financial inclusion, investment, tourism, innovation and economic development to our country,” Bukele said in a tweet shortly before the vote.

He previously stated that the move would open financial services to 70% of Salvador citizens who do not have a bank account.

El Salvador’s economy relies heavily on remittances, or remittances from abroad, accounting for about 20% of its gross domestic product (GDP).

More than 2 million Salvadorians live abroad, but they remain closely associated with their place of birth, sending over $ 4 billion (£ 2.8 billion) each year.

On Twitter, some financial and legal observers described the change in law as a surprising achievement and a game changer, while others expressed concern about cryptocurrency volatility. Experts warn that El Salvador could complicate the issue of the International Monetary Fund (IMF) seeking a $ 1 billion or more program.

The parliamentary vote took place on the same day. Former U.S. President Donald Trump said he saw Bitcoin as a “scam”..

“I don’t like it because it’s another currency that competes with the dollar,” he told Fox Business.

He added that he wants the dollar to become the “currency of the world.”

Bitcoin, a virtual asset that is not directly related to the real economy, has undergone significant fluctuations in value over the years.

Most central banks in the world are considering the possibility of creating their own digital currency. In April, the Bank of England Announced that it is considering creating digital money that exists with cash and bank deposits.

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