SAN SALVADOR – El Salvador has become the first country in the world to formally accept bitcoin as a 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 in favor of the initiative to create a law that would formally accept bitcoin, despite concerns about the potential impact on El Salvador’s program with the International Monetary Fund.
Bukele pointed to the use of bitcoin for the potential to help Salvadorans abroad send money back home, while saying the US dollar would also continue as a legal tender.
“It will bring financial inclusion, investment, tourism, innovation and economic development to our country,” Bukele said in a tweet shortly before the vote in Congress, which is controlled by his party and allies.
He added that the use of bitcoin, the use of which will be optional, poses no risks to users. Its use as a legal tender will expire within 90 days.
“The government will guarantee the convertibility to the exact value in dollars at the moment of each transaction,” Bukele said.
El Salvador’s dollar economy relies heavily on money returned from workers abroad. Data from the World Bank showed that overpayments to the country in 2019 amounted to almost $ 6 billion or about a fifth of GDP, one of the highest ratios in the world.
Experts said the move to bitcoin could complicate talks with the IMF, where El Salvador envisages a program worth more than $ 1 billion.