Bitcoin now legal tender in El Salvador, first nation to adopt cryptocurrency
On Wednesday, El Salvador’s president signed into law a proposal to adopt bitcoin as legal tender, making the Central American nation the first in the world to officially use the cryptocurrency.The exchange rate with the dollar will be set by the market, and exchanges from dollars to bitcoin won’t be subject to capital gains tax.
The country has used the US dollar as its primary currency since 2001, when the government was attempting to stabilize and shore up an economy left in shambles by a bloody 12-year civil war that ended in 1992.The government switched its accounting system to dollars and stopped printing and minting its old currency, colones, though it did not remove it as legal tender.
El Salvador’s use of the dollar as its primary currency has meant that the country has minimal control over its monetary policy; for all intents and purposes, the US Federal Reserve exerts more power.Bukele is hoping that by jumping on the bitcoin bandwagon, the country will attract investors.