El Salvador will officially recognize bitcoin as a means of payment. The digital currency, together with the US dollar, is then the only valid means of payment in the country. Retailers must accept the digital currency, although many will not do so in practice.
A majority of 62 of 84 MPs voted in favor of President Nayib Bukele’s bill . He came up with the proposal last week. By accepting the currency as legal tender, the country hopes that the economy can get going. Currently, seventy percent of residents would not have a bank account.
According to the law, both government institutions and companies are obliged to accept bitcoins as a means of payment. With this, residents can, for example, pay their taxes, but also buy products in shops. Retailers are also allowed to express prices in bitcoin or in satoshis, although it is questionable whether this will happen in practice due to the strongly fluctuating value of the currency. The government does guarantee companies that do not want to own bitcoin themselves; the seller must then accept the currency, but the government can then immediately convert it into dollars.
The law will not officially come into effect for 90 days. A condition for this is that by then a good infrastructure has been set up in the country, so that the currency can be used practically. For example, a wallet is being developed by the government , although El Salvadorians are not obliged to use it.
El Salvador is the first country in the world to accept cryptocurrencies as an official currency. However, several national banks are developing their own crypto currency or are researching this.