El Salvador’s new Legislative Assembly, controlled by President Nayib Bukele’s New Ideas party, approved on Tuesday the Bitcoin Law. The text turns this small Central American country into the first in the world that adopts cryptocurrency as legal tender.
The cryptocurrency can be used “in any transaction and any title that public or private natural or legal persons required to carry out, ” according to the new law.
The exchange rate between bitcoin and the dollar will be freely set by the market and any price “may be expressed in bitcoin”, according to the law, which obliges every economic agent to “accept bitcoin as a form of payment.”
Those who, due to a notorious fact and in an obvious way, are excluded “do not have access to technology” that allows to execute the transactions.
The State will promote training and mechanisms necessary for the population to access bitcoin transactions, the text added. For accounting purposes, the dollar will be used as the reference currency.
Deputies vote on the Bitcoin law during Tuesday’s session in the Legislative Assembly of El Salvador. Photo: EFE
Among the arguments in favor of the project, the Ministry of Economy assures that 70% of the population does not have access to traditional financial services.
In addition, in order to boost the country’s economic growth “it is necessary to authorize the circulation of a digital currency whose value obeys exclusively free market criteria” to increase wealth, the Ministry said.
Ambitious but simple law
“The Bitcoin law is ambitious, but simpleIt is also well structured so that it has zero risk for those who do not want to take risks. The government will guarantee convertibility to the exact value in dollars at the time of the transaction, ” Bukele said on his Twitter account while the law was being processed.
The president added that the rule will bring financial inclusion, investment, tourism, innovation and economic development. “Let no one tell us that we are too small to be big,” he said.
The regulations will come into force ninety days after its publication in the Official Gazette. The Central Reserve Bank and the Superintendency of the Financial System will issue the corresponding regulations in that period, according to the law.
According to the new legislation, the Salvadoran State will guarantee through the creation of a trust in the Development Bank of El Salvador (BANDESAL) the automatic and instantaneous convertibility of bitcoin to dollar.