El Salvador became the first country within the world to officially adopt bitcoin as legal tender after Congress approved President Nayib Bukele’s proposal to adopt the cryptocurrency.
With 62 out of 84 possible votes, a majority of lawmakers voted favorably for the initiative to create a law that will officially adopt Bitcoin, despite concerns about the potential effect on El Salvador’s program with the International Fund. The Bitcoin price in India at 1 p.m. IST on June 9 was Rs. 24.5 lakhs.
Bukele touted the use of Bitcoin for its potential to help Salvadorans living abroad send money home, while claiming that the US dollar will also continue to be legal tender.
“This will bring financial inclusion, innovation, investment, economic development and tourism for our country,” said Bukele during a tweet shortly before the vote in Congress, which is controlled by his party and its members.
He added that the use of Bitcoin, the use of which will be optional, would not bring threats to users. Its use as legal tender will come into force in 90 days.
“The government will guarantee convertibility at the precise value of dollar at the time of every transaction,” said Bukele.
Much of El Salvador’s dollarized economy depends on money sent back by workers overseas. Data from the World Bank showed that remittances to the country amounted to nearly $6 billion (roughly Rs. 43,790 crore), or roughly one-fifth of GDP in 2019, one of the highest ratios in the world.
Experts have said the switch to Bitcoin could complicate talks with the IMF, where El Salvador is seeking a program worth more than $1 billion (roughly Rs. 7,300 crore).