El Salvador Makes History as First Nation to Adopt Bitcoin as Legal Tender
El Salvador's Congress passes a new law making bitcoin unrestricted legal tender alongside the US dollar, aiming to boost financial inclusion for its unbanked citizens.
El Salvador makes history as the first country to adopt bitcoin as legal tender after lawmakers pass the Bitcoin Law with a supermajority of 62 out of 84 votes. The new law regulates bitcoin as unrestricted legal tender, allowing prices to be displayed in the cryptocurrency, tax contributions to be paid with it, and exempting bitcoin exchanges from capital gains tax. Following the legislative vote, the price of bitcoin rises by five percent to $34,239.17.
The Central American nation currently uses the US dollar as its official currency, and the law states that the exchange rate between the dollar and bitcoin is freely established by the market. To support this transition, the government partners with digital wallet company Strike to build modern financial infrastructure using bitcoin technology. Furthermore, the state promises to provide the necessary training and mechanisms to help the population access and conduct bitcoin transactions.
This bold move aims to address a major economic gap, as approximately 70 percent of El Salvador's population currently lacks access to traditional financial services. Critics point to bitcoin's notorious price volatility as a potential hurdle for everyday transactions, noting that the digital asset remains significantly below its April record high. Despite these concerns, President Nayib Bukele and supporters view the cryptocurrency as a powerful tool to increase financial inclusion and liberate the economy.