State of El Salvador Approves Bitcoin to be Used as a Payment Tool

El Salvador's parliament approved a proposal from President Nayib Bukele for a law classifying Bitcoin as legal tender in the country. This would make El Salvador the first Central American country in the world to do so.

A majority of lawmakers voted in favor of the Act on cryptocurrencies, despite concerns about the potential effect on El Salvador's program with the International Monetary Fund (IMF).

"#BitcoinLaw has just been approved by a qualified majority in the legislative assembly," President Nayib Bukele said via Twitter after Tuesday's vote in the assembly.

A majority of 62 votes out of 84 lawmakers approved the bill, which President Bukele proposed last week.

El Salvador's House of Representatives tweeted: "With 62 votes, plenary session approved #LeyBitcoin (which supports) El Salvador to adopt #Bitcoin as legal currency. #Thenewsassembly continues to make history!"

Bukele has touted the use of Bitcoin for its potential to help Salvadorans living abroad send money back home. He also said the US dollar would also continue as legal tender.

"This will bring financial inclusion, investment, tourism, innovation and economic development to our country," Bukele said in a tweet shortly before the vote.

He added that the use of Bitcoin, the use of which is optional, will not carry any risk to users. Its use as legal tender will become law within 90 days.

"The government will guarantee convertibility to the correct value in dollars at the time of each transaction," Bukele said.

According to Al Jazeera, El Salvador's dollar economy relies heavily on money sent back from citizens working abroad. World Bank data shows remittances to the country generated nearly $6 billion, about a fifth of GDP, in 2019. This is one of the highest ratios in the world.

Experts say the move to Bitcoin could complicate talks with the IMF, where El Salvador is seeking a program of more than $1 billion.

Cryptocurrency is a form of digital money that can be used to pay for several online transactions.

As with any "real" currency, one, 10, or millions of Bitcoins can be owned. Unlike real currencies, cryptocurrencies exist only online and are not backed by any government or central bank.

First in the World, El Salvador Will Use Bitcoin as a Legal Payment Tool