El Salvador legislature passed a law on Wednesday to officially recognize bitcoin as a legal tender. It is only last week, President Nayib Bukele announced the proposal in a video message at Bitcoin 2021 summit in Florida.
The New Ideas party founded by Bukele enjoys a supermajority in the Latin American country’s congress making any proposal by President to be passed. The party is currently headed by his cousin Xavier Bukele. The president intends to sign the bill into law on Wednesday late evening or early in the morning Thursday. The eighty-four-member house voted in 62-19 to pass the bill with three abstentions.
According to the Statement of Objects and Reasons of the bill, the aim is to promote the nation’s economic growth and authorize the circulation of a digital currency whose value answers exclusively to free-market criteria. The bill also notes that nearly 70% of the population does not have access to traditional financial services.
Con 62 votos, el pleno legislativo aprueba la #LeyBitcoin con la que El Salvador adopta el #Bitcoin como moneda de circulación legal.— Asamblea Legislativa (@AsambleaSV) June 9, 2021
¡#LaNuevaAsamblea sigue haciendo historia! pic.twitter.com/Ur9OQzPvYI
As per the English-translated copy of legislation tweeted by the president, the legislation will come into force within 90 days from the date of publication in the official gazette. The country will offer alternatives to have automatic and instant convertibility of bitcoin to USD. The country has no monetary policy and uses USD as legal tender since 2002.
The law permits all obligations expressed in USD, existing before the effective date may be expressed and paid in bitcoin. The government intends to create a trust fund in its development bank to guarantee instant conversions to USD to bitcoin and vice versa.
The law also imposes an obligation on every service provider to accept bitcoin as payment when offered to him as part of day-to-day transactions. Persons who do not have technology means are exempted from accepting bitcoin and the country will promote the necessary training and mechanisms so that the people can access bitcoin transactions. The legislation in total has 16 articles.
The president also attended a Twitter Space session as the congress was discussing the bill where he announced plans to provide permanent residency for those who invest 3 BTC in El Salvador. Bukele also indicated that his government may promote bitcoin mining.