A majority of 62 of 84 lawmakers passed the bill, which President Bukele proposed last week.
The Savior has approved it a proposal of President Nayib Bukele by a law to classify Bitcoin as a legal tender, making the Central American nation the first in the world to do so.
Most lawmakers voted in favor of the initiative Tuesday afternoon to create a law that would formally embrace cryptocurrency, despite concerns about the potential effects of El Salvador’s program with the International Monetary Fund.
“The #BitcoinLaw has just been approved by qualified majority” in the legislative assembly, tweeted by President Nayib Bukele after the vote in the assembly.
– Legislative Assembly (@AsambleaSV) June 9, 2021
Translation: with 62 votes, the legislature approves the #LeyBitcoin [that allows] El Salvador will adopt #Bitcoin as its legal currency. #Thenewassembly continues to make history,! said a tweet from the Legislature.
Bukele has promoted the use of Bitcoin for its potential to help Salvadorans living abroad send home remittances, saying the U.S. dollar will also continue as a legal tender.
“It will bring financial inclusion, investment, tourism, innovation and economic development for our country,” Bukele said in a tweet shortly before the vote.
He added that the use of Bitcoin, the use of which will be optional, would not pose any risks to users. Its use as legal tender will take effect in 90 days.
“The government will ensure convertibility to the exact dollar value at the time of each transaction,” Bukele said.
El Salvador’s dollarized economy depends heavily on the money returned from citizens working abroad.
World Bank data showed that remittances in the country accounted for about $ 6 billion, about a fifth of GDP in 2019, one of the highest ratios in the world.
Experts have said the move to Bitcoin could complicate talks with the IMF, where El Salvador is looking for a more than $ 1 billion program.
The head of the IMF mission in El Salvador, Alina Carare, said Monday afternoon that the fund “follows the news and will have more information as we continue our consultations with the authorities.”
Carlos de Sousa, portfolio manager at Vontobel Asset Management, said Bitcoin’s push seemed ill-considered, as Bukele could shoot himself in the foot making it difficult to raise tax revenue.
“Cryptocurrencies are generally a very easy way to avoid taxes and a very simple way to simply avoid the authorities because it is a completely decentralized system, money laundering can be done, tax evasion can be done, and so on. “, he said.
A cryptocurrency is a digital form of money which can be used to pay for some online transactions.
As with “real” coins, one, ten, or millions of bitcoins can be owned. Unlike real currencies, cryptocurrencies only exist online and are not backed by any government or central bank.
Crypto say the devotees coins represent the economy of the future. But ultimately, their value depends on their limited supply and the number of people chasing them.
According to the CoinMarketCap page, the cryptocurrency market grew to more than $ 2.5 trillion in mid-May last year, driven by the interest of increasingly serious investors from Wall Street to Silicon Valley.
But the volatility currency, which is currently priced at $ 36,127, and its murky legal status have raised questions about whether it could ever replace fiat currency in day-to-day transactions.