El Salvador proposes law to make bitcoin legal tender

Nayib Bukele, President of El Salvador, will address the Congress at the Legislative Assembly building in San Salvador, El Salvador on Tuesday, June 1, 2021. Photographer: Camilo Freedman / Bloomberg via Getty Images

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The President of El Salvador, Nayib Bukele, has presented a law to the country’s Congress proposing to make Bitcoin legal tender.

If passed by lawmakers, El Salvador would be the first nation in the world to give cryptocurrency this status.

Bukele posted a screenshot of the “Bitcoin Law” in a tweet on Wednesday.

“The purpose of this law is to regulate Bitcoin as unrestricted legal tender with liberating power, unlimited in every transaction and for every title that public or private natural or legal persons must comply with,” the law says.

If the law is passed, prices can be shown in Bitcoin, tax contributions paid in the digital currency, and exchanges into Bitcoin will not be subject to capital gains tax.

Bitcoin is known for wild price fluctuations have led critics to suspect so not suitable as an effective currency. It is still unclear how El Salvador will eventually adopt Bitcoin as legal tender.

According to the law, the exchange rate to the US dollar is “freely determined by the market”. The current official currency of El Salvador is the US dollar.

The law also states that the state “will promote the necessary training and mechanisms so that the population can access Bitcoin transactions”.

About 70% of El Salvador do not have access to traditional financial services under the Bitcoin law. The cryptocurrency is seen as a way to increase financial inclusion.

The proposal must go through El Salvador’s legislative process before being passed into law.

Bukele’s move to take the bill to Congress comes after he announced last week that it would El Salvador has partnered with the digital wallet company Strike. Build the country’s modern financial infrastructure using Bitcoin technology.

In April, Bitcoin hit a record high of $ 64,829.14 but has fallen by almost half since then, according to CoinDesk data. It’s still up over 230% in the past 12 months. This increase has been attributed to a number of factors including increasing interest from institutional investors and big companies like Tesla and square Buy bitcoin.

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