Earlier on Wednesday, the President of El Salvador passed the Congress by an absolute majority in El Salvador’s bill to make Bitcoin (BTC) legal tender.
The purpose of the law is to supervise Bitcoin as an available legal tender. Therefore, it will enable citizens to have free power, be unrestricted in any transaction. Also, they can have any ownership required by a public or private natural or legal person.
Citizens will be able to pay any prices in BTC. Taxis also will get payment in Bitcoin. Besides, Bitcoin transactions will not subject to capital gains tax.
Bitcoin is known for its dramatic price fluctuations. As a result, it has prompted critics to believe that it is not suitable for being a functional currency. In addition, it is not clear how El Salvador will eventually launch BTC as legal tender.
According to the proposed law, the exchange rate with the U.S. dollar will be freely determined by the market. The current official currency of El Salvador is the U.S. dollar.
How easy is it for El Salvador citizens to switch to digital currency?
According to the bill, the state will provide infrastructure to enable Bitcoin users to convert BTC to U.S. dollars when needed instantly. However, many people need to learn how to use digital assets. That’s why the state will provide “training and mechanisms” to help citizens unfamiliar with Bitcoin usage.
According to Bitcoin law, approximately 70% of El Salvador does not have access to traditional financial services. Therefore, cryptocurrency is seen as a way to increase financial inclusion.
The recent criticism of Bitcoin is an environmental issue because Bitcoin mining consumes a lot of energy. Therefore, the president said that he did not think of Bitcoin mining but was optimistic about renewable energy Bitcoin mining.
The proposal needs to pass through El Salvador’s legislative process before it can become law.
Buckler announced last week that El Salvador had established a partnership with the digital wallet company Strike. Their goal is to use Bitcoin technology to build the country’s modern financial infrastructure before submitting the law to Congress.
Bitcoin’s recent movements
In April, BTC hit a record high of $64,829.14 but has since fallen by nearly half. However, in the past 12 months, it has still risen by more than 230%. This rise can be attributed to various factors. These factors include institutional investors and increased interest in buying Bitcoin by large companies such as Tesla and Square.