In 90 Days, All Businesses in El Salvador Must Accept Bitcoin
Bitcoin is poised to become legal tender in El Salvador. President Nayib Bukele’s legislation to make Bitcoin an official currency has passed in Congress, meaning that it has equal status to the US Dollar in El Salvador. This has some interesting implications for the country, one of which being that, within 90 days, every business must accept Bitcoin – by law.
What Changes Does this Legislation Make?
President Bukele posted images of this historic legislation to his Twitter account (along with English translations), which refers to bitcoin as “unrestricted legal tender with liberating power”. The documents give a rough idea of what will be changing in El Salvador in the days and weeks to come. Perhaps most fascinating is Article 7 of this document, which states that:
“Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service”.
The El Salvador government has stated that businesses have 90 days to prepare themselves for accepting Bitcoin as legal tender, which will then be a legal requirement. This affects all businesses, regardless of size. It means that the Bitcoin network could soon see an increase in the number of transactions taking place on its blockchain– the likes of which it has never experienced before.
It is hard to fathom the sheer influx of new users Bitcoin and crypto will see. El Salvador has a population of 6.5 million people. This is potentially 6.5 million new Bitcoin users. Crypto is about to become a part of the norm for an entire nation.
The country will be providing tools and training programs to help citizens who are unfamiliar with Bitcoin, so that they can engage with it in an easy way. This is especially useful as citizens will also be able to pay their taxes with Bitcoin.
On the note of taxes, the legislation also states that exchanges in Bitcoin will not be subject to capital gains tax, similar to how other fiat currencies are not subject either. This is huge news for investors, making Bitcoin more enticing to trade with and hold.
It is hard to grasp just how much this law has changed the world of economics. Via a supermajority, El Salvador’s Congress has elevated Bitcoin to the status of an official currency, meaning it will be viewed on the world stage in a similar light to the foreign exchange market.
Latin America May Become a Crypto Hub
El Salvador has shown itself to be the most crypto-friendly country the world has seen, leapfrogging over places like Japan and Switzerland, which are both known for being pro-crypto. Other countries in South and Central America are also looking towards crypto. Mexican Senator, Eduardo Murat Hinojsa, has tweeted that he will be “proposing a legal framework for crypto coins in Mexico’s lower house”.
Paraguay, Panama, Brazil, and Argentina are also looking towards crypto adoption. This suggests that Latin America may become a hub for blockchain and crypto businesses, which would make them the new leaders in FinTech. This spells bad news for the US, which is still struggling with developing crypto regulations and policies.
These countries may be interested in spearheading the push for blockchain technology, but there is an additional factor that could be driving this. Historically, the US has always imposed itself on Latin American countries, developing sanctions, restrictive treaties, and engaging in military activity.
Considering how the US dollar is seen as the global standard (for the time being), it makes sense that these countries would look favorably towards adopting a coin that is entirely decentralized, allowing them to essentially de-couple themselves from US financial policy and activity. For these countries, Bitcoin offers a way out of US economic domination.
If these countries were all to adopt Bitcoin as legal tender, it would also act as the ultimate stress-test for both the blockchain network, and the technology as a whole. If successful, it would show the world just how stable and effective crypto is as an alternative to fiat. The question now, is how well would Bitcoin handle all this traffic?
Do you think El Salvador will trigger a wave of crypto adoption in other countries? Let us know in the comments!