El Salvador, which uses the US dollar as the go-to fiat, has officially recognized Bitcoin as a legal tender as the country’s legislature passed a bill with a ‘supermajority’ on Tuesday.
As tweeted by the country’s President Nayib Bukele 62 legislative members out of a total of 84 have voted in favor of the bill, while 19 members opposed and three abstained.
The bill is now pending to be signed by the President, which is expected to be done by the close of Wednesday.
— Nayib Bukele 🇸🇻 (@nayibbukele) June 9, 2021
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Bitcoin Is a Legal Tender
The bill, which was proposed by Bukele himself, touches many areas related to the use of cryptocurrencies. It recognizes Bitcoin as a legal tender, scraping all associated capital gains tax. In addition, the country will accept taxes in Bitcoin, and the US dollar will be the ‘reference currency’ when denominating prices.
Moreover, the bill mandates ‘every economic agency’ in the country to accept Bitcoin as payment when offered against goods and services. However, if any merchant does not want to take the risk of holding Bitcoins due to the price fluctuations, the government will facilitate the instant conversion of Bitcoin to US dollars.
“Without prejudice to the actions of the private sector, the State shall provide alternatives that allow the user to carry out transactions in bitcoin and have automatic and instant convertibility from bitcoin to USD if they wish,” the bill states.
“Furthermore, the State will promote the necessary training and mechanisms so that the population can access transactions.”
The El Salvador government will maintain a $150 million trust fund to offer the BTC to USD conversion services. It will sell some of the received Bitcoins to replenish the trust fund.
Also, Bukele is considering promoting Bitcoin mining at a time when the major mining industry is facing hostility in China. The El Salvadoran government officials will discuss its crypto plans further at a meeting with the International Monetary Fund in the coming weeks.