El Salvador Becomes First Country to Adopt Bitcoin as Legal Tender
El Salvador's congress approves a law classifying Bitcoin as legal tender alongside the US dollar. The historic move aims to boost financial inclusion and streamline remittances despite potential IMF complications.
El Salvador makes history as the first country in the world to adopt Bitcoin as legal tender. A majority of 62 out of 84 lawmakers approve the bill proposed by President Nayib Bukele, which allows the cryptocurrency to officially circulate alongside the US dollar. The new law takes effect in 90 days and guarantees that the government converts Bitcoin to the exact value in dollars at the moment of each transaction.
President Bukele promotes the initiative as a way to improve financial inclusion, attract investment, and boost tourism and economic development. The use of Bitcoin remains optional for citizens, but it plays a strategic role in the country's dollarised economy. El Salvador relies heavily on remittances from citizens working abroad, which account for nearly $6 billion or about a fifth of its GDP, making cryptocurrency transfers a potentially cheaper and faster alternative.
Despite the anticipated economic benefits, experts warn that this historic shift complicates El Salvador's ongoing negotiations with the International Monetary Fund. The nation is currently seeking a program worth more than $1 billion from the IMF, and the adoption of a volatile digital currency raises significant concerns among international financial institutions about economic stability and regulatory oversight.