The legislator of El Salvador approved a bill which will make bitcoin a legal tender in the country. It is the first time that a country will recognize cryptocurrency as a form of payment for any type of monetary debt.
El Salvador's President Nayib Bukele presented the bitcoin proposal to the Legislative Assembly on Tuesday evening, calling on the country to "regulate bitcoin as an unrestricted legal tender."
A super majority approved the bill
The proposal received a favorable opinion from the legislator, before an official vote was held. Members of the legislature passed the bill late Tuesday evening by a majority vote, receiving 62 out of 84 votes. According to the tally, 19 opposed and three abstained.
“The #BitcoinLaw was passed by a super majority in the Salvadoran Congress,” Bukele tweeted. "It's history!"
El Salvador is not the only country that will allow bitcoin to be used to purchase goods and services, but it is the only one currently to accept cryptocurrencies for all forms of monetary debt.
While the Japanese Payment Services Act defines cryptocurrency as a property value, it states that crypto transactions are only applicable to property values stored digitally on electronic devices, not as fiat currency.
A series of new bitcoin laws
The new law makes several proposals on how the country should adopt cryptocurrency. This includes requiring any business, whether it be acquiring a good or a service, to accept payments in cryptocurrencies, allowing people to pay their taxes in bitcoin. It also excludes bitcoin from capital gains taxes.
Beyond that, the country will also be required to provide alternatives that allow the user to transact in bitcoins and be able to seamlessly convert from bitcoin to USD if they wish.
The law requires the country to put in place training and other educational material to help the population understand how bitcoin transactions work. Furthermore, it requires the creation of a trust at the Banco de Desarrollo de El Salvador to allow the instant convertibility of bitcoin into the US dollar.
"To encourage the nation's economic growth, it is necessary to authorize the circulation of a digital currency whose value responds exclusively to free market criteria, in order to increase national wealth for the benefit of the greatest number of inhabitants", an Italian translation of the design by law stated.
The president will sign the bill early in the morning, which will come into force 90 days after its publication in the Official Gazette, where all documents ordered by Salvadoran law are published.
“This night is historic and the Salvadoran people have observed what is happening. Today we have started a great economic transformation, ”said Congressman William Soriano.