The president of El Salvador announced that a law making bitcoin legal tender has been approved, providing details about what this will mean.
According to an announcement from President Nayib Bukele, the Congress of El Salvador has approved a law regulating bitcoin as legal tender. He announced that 62 out of 84 votes approved the measure.
Bill text also shared by the president indicated that the purpose of the 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.”
The law text also indicated that the exchange rate between BTC and the USD will be established freely by the market, tax contributions may be made in bitcoin, exchanges in bitcoin will not be subject to capital gains taxes and that every economic agent must accept BTC when offered unless they do not have access to the technology that would allow them to do so.
“The State shall provide alternatives that allow the user to carry out transactions in bitcoin and have automatic and instant convertibility from bitcoin to USD if they wish,” it reads. “Furthermore, the State will promote the necessary training and mechanisms so that the population can access bitcoin transactions.”
It’s not immediately clear what platforms or services El Salvador may leverage to help its citizens onboard to Bitcoin, but Jack Mallers, the founder of Lightning Payments platform Strike, helped Bukele announce this forthcoming law at the Bitcoin 2021 event last week. During the announcement, Mallers said that he was helping El Salvador establish the necessary infrastructure for its citizens to utilize Bitcoin.
Before the law is enforced, the Banco de Desarrollo de El Salvador will create a trust that can guarantee automatic and instantaneous conversion of bitcoin to USD.
“All obligations in money expressed in USD, existing before the effective date of this law, may be paid in bitcoin,” per the law text.
The law will take effect 90 days after its forthcoming publication in the country’s official gazette.