El Salvador Adopts Bitcoin as Legal Tender
In June 2021, El Salvador became the first country to adopt Bitcoin as a legal tender. El Salvador’s current official currency is the U.S. dollar. Bitcoin will become a legal tender in 90 days alongside the U.S. dollar. According to the new law, Central Bank and El Salvador’s Superintendency of Financial System must develop norms and regulations to facilitate the use of Bitcoin in the market.
The law establishes the exchange rate between bitcoin and the U.S. dollar. Other characteristics of the new law include: prices may be expressed in bitcoin; tax contributions can be paid in bitcoin; exchanges in bitcoin will not be subject to capital gains tax; all economic agents must accept bitcoin as payment when offered; the government should provide alternatives that allow the user to carry out transactions in bitcoin, will promote necessary training and mechanisms so that the population can access bitcoin transactions. The government announced El Salvador bitcoin wallet, named “Chivo” with initial $30 USD in bitcoin deposit to stimulate the use of the bitcoin wallet.
Cryptocurrency observers described the law as an extraordinary accomplishment that will impact El Salvador in a significant way, while others from the technical, economic, and market side have raised concern about volatility, illegal actions (money laundering), and the need for expert analysis of the affects on trade, the macro and micro economic impact in El Salvador, as well as to the potential complication with the international Monetary Fund (IMF) where El Salvador is seeking a more than $1 billion program.
U.S. cryptocurrency observers, analyzers, technology providers, brokers, hardware, and app providers are recommended to follow daily announcements, comments from observers, and final regulations. Most business opportunities for U.S. companies would be in the internet services, bitcoin ATM, phones, wallets, money services, technology. Immediate demand for U.S. services is focused consultants, law firms, and accounting.
A learning curve on how to do international business with bitcoins and market demand for supportive technology is expected.
U.S. companies interested on Spanish or English version of the law contact the U.S. Commercial Service Office in San Salvador at email@example.com.