In a historic move, the South American country of El Salvador has adopted Bitcoin – one of the world’s most popular cryptocurrencies – as legal tender in the country to operate alongside the US dollar.
The proposal was passed earlier this week by congress with a vote of 62 out of 84 and Bitcoin’s use as legal tender will come into effect within 90 days. Significantly, this will mean that vendors must now accept Bitcoin as a payment, no capital gain taxes will be applicable to the currency, and tax contributions can also be paid through the crypto, alongside other laws anticipated to transform El Salvador.
“This will generate jobs and help provide financial inclusion to thousands outside the formal economy, and in the medium and long term we hope that this small decision can help us push humanity at least a tiny bit into the right direction,” said President Nayib Bukele.
President Bukele also highlighted how the move will simplify the process of sending remittances to the country for the diaspora, a transfer of money that contributes to a large portion of the country’s GDP.
The news was welcomed by crypto enthusiasts as a major accomplishment for the small nation. However, it was also met with concern by experts who have expressed worry over the currency’s volatility.
Road to Permanent Residency with Bitcoins
During a Twitter Spaces conversation, President Bukele also announced that he would be introducing a bill that will offer those who invest BTC3 or Bitcoin 3 in El Salvador a permanent residency permit – which equals to $106,000 in today’s rate. This will likely attract crypto-investors due to the lack of taxation on BTC transactions.
While there hasn’t been any additional information on other requirements for residency, it could take the form of an investment into either real estate or business. There will also need to be clarification on how minimum investment requirements will be impacted by fluctuations in the crypto market.
The Rise of Crypto-Investors
Acquiring permanent residency or a second citizenship aligns with the needs of the growing crypto-investors population. Financial freedom is a high priority for those who want to protect their assets and ensure that they are not burdened with bureaucratic hassles. In today’s steadily digitalised world, this has become more commonplace with many countries taking cryptocurrency into consideration.
Whether the rest of the world will follow El Salvador’s bold move is yet to be seen.