El Salvador’s President, Nayib Bukele, is proposing a Bill to adopt Bitcoin and other cryptocurrencies as legal tender in his country.
“Next week, I will send to Congress a Bill that makes Bitcoin legal money,” Bukele said on Saturday in a video message to the Bitcoin 2021 conference in Miami, Florida.
The 39-year-old President, who has maintained approval ratings above 90 percent and made Twitter his preferred way of communicating, characterised it as an idea that could help El Salvador move forward.
The move would make the Central American nation the first in the world to formally accept the cryptocurrency as legal money and would “allow the financial inclusion of thousands of people who are outside the legal economy,” Bukele said.
The Bill aims to create jobs, he said, in a country where “70 percent of the population does not have a bank account and works in the informal economy.”
The El Salvador government is yet to give details of the Bill, which will require approval from a Parliament dominated by the President’s allies.
Remittances from Salvadorans working overseas represent a major chunk of the economy, equivalent to roughly 22 percent of Gross Domestic Product.
In 2020, remittances to the country totaled $5.9 billion, according to official reports.
According to Bukele, bitcoin represented “the fastest growing way to transfer” those billions of dollars in remittances and to prevent millions from being lost to intermediaries.
“Thanks to the use of bitcoin, the amount received by more than a million low-income families increases by several billion dollars every year. This improves life and the future of millions of people”, he said.
The cryptocurrency market grew to more than $2.5 trillion in mid-May 2020, according to the Coinmarketcap page, driven by interest from increasingly serious investors from Wall Street to Silicon Valley.
But the volatility of bitcoin (currently priced at $36,127) and its murky legal status has raised questions about whether it could ever replace fiat currency in day-to-day transactions.
“In the short term this will generate jobs and help provide financial inclusion to thousands of people outside the formal economy”, Bukele said in a video shown at the Bitcoin 2021 conference in Miami.
Strike, a mobile payments app that launched in El Salvador in March, said in a statement that it welcomes the legislation and is working with the country to make the use of bitcoin technology successful.
“This is a boom that is heard around the world for bitcoin. Adopting native digital currencies as legal tender provides El Salvador with the most secure, efficient and globally integrated open payment network in the world”, Strike founder and CEO Jack Mallers was quoted as saying at the Miami conference.
Apart from El Salvador, several other countries are also planning to accept financial transactions via bitcoin. Payments using cryptocurrencies have also begun to be applied by Apple and Tesla in purchasing devices.