A Reuters report said the majority of lawmakers approved a bill introduced by President Nayib Bukele. The law paves the way for Bitcoin to be approved as legal tender in the South American country.
The president has endorsed the use of cryptocurrency to stimulate the economy. El Salvador’s economy relies on remittances and those who work overseas can send money home in bitcoins.
“It will bring financial inclusion, investment, tourism, innovation and economic development to our country,” said Bukele in a tweet.
He added that the use of Bitcoin, the use of which will be optional, would not pose any risks to users. Its use as legal tender will take effect in 90 days.
“The government will guarantee convertibility to the exact dollar value at the time of each transaction,” said Bukele.
El Salvador’s dollar economy is heavily reliant on funds returned by foreign workers. World bank Data showed that remittances to the country amounted to nearly $ 6 billion, or about a fifth of GDP, in 2019, one of the highest rates in the world.
Experts have said that switching to Bitcoin could make talking to them more difficult IMFwhere El Salvador is aiming for a more than $ 1 billion program.
(With inputs from Reuters)