What Happened: Earlier today, members of El Salvador’s Congress voted in favor of a bill that established Bitcoin as a legal tender in the country.
Citizens of the country will be able to pay taxes in the digital currency, and exchanges in Bitcoin will not be subject to capital gains tax.
The price of Bitcoin rose by over 4% to $34,492 shortly after the bill received 62 out of 84 votes in the legislature.
Why It Matters: The country’s President Nayib Bukele sent the “Bitcoin Law” to Congress for a vote on Wednesday, after announcing earlier his plans to make El Salvador the first country to formally adopt Bitcoin in a video at the Bitcoin 2021 conference in Miami.
Bukele commented that with a market cap of $680 billion dollars, if 1% of Bitcoin is invested in El Salvador, then the country’s GDP would increase by 25%.
“The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out,” states the proposed law.
Read also: US Senator Cynthia Lummis Asks Followers To Share Bitcoin Success Stories After Public Endorsement Of Cryptocurrency
It also states that the U.S. dollar will be used as the reference currency for accounting purposes. The Executive Branch will reportedly develop the “necessary institutional structure” to apply this law, while the necessary training will be provided to the population to access Bitcoin transactions.
The proposal will first need to go through El Salvador’s legislative process before being passed as the law.
Image: PresidenciaSV on Wikimedia Commons
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