El Salvador has become the first country in the world to accept Bitcoin (BTC) as a form of legal tender, under a new law championed by the country’s President, Nayib Bukele, and passed by the country’s Congress.
Most regulators have classified BTC as an asset, not as legal tender, meaning profits made by holding the cryptocurrency are subject to capital gains tax upon withdrawal.
Under the new law, BTC can now be used along the same lines as regular currency in El Salvador.
“The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out,” the law reads.
Prices can now be shown in bitcoin, tax contributions can be paid with the digital currency, and exchanges in bitcoin will not be subject to capital gains tax.
Bitcoin is known for wild price swings that have prompted critics to suggest it is not suitable to be an effective currency. It’s still unclear how El Salvador will ultimately roll out bitcoin as legal tender.
The exchange rate with the U.S. dollar “will be freely established by the market,” according to the proposed law. El Salvador’s current official currency is the U.S. dollar.
The law was passed with a supermajority of 62 out of 84 votes in the Congress of El Salvador.
The #BitcoinLaw has been approved by a supermajority in the Salvadoran Congress.
62 out of 84 votes!
— Nayib Bukele 🇸🇻 (@nayibbukele) June 9, 2021
President Bukele, who championed the law, celebrated the vote in a post on Twitter.
“History!” declared the President.
BTC’s price ticked upwards following news of the law’s passage, with an increase of 6.81 percent as of 9:30 am eastern time according to CoinTelegraph.
Allum Bokhari is the senior technology correspondent at Breitbart News. He is the author of #DELETED: Big Tech’s Battle to Erase the Trump Movement and Steal The Election.