El Salvador parliament passes Bitcoin law, Bitcoin now legal tender

Lawmakers in El Salvador have voted to approve the country’s Bitcoin Law, meaning the country becomes the first nation to adopt Bitcoin as legal tender.

On Twitter, the El Salvador president Nayib Bukele could not hide his excitement.

“The Bitcoin Law has been approved by a supermajority in the Salvadoran Congress,” Bukele wrote. “History!”
Historical Moment
Over the weekend, Bukele announced plans to introduce legislation that would make Bitcoin legal tender in El Salvador at the Bitcoin 2021 conference in Miami.

At the conference, Bukele confirmed that the country had partnered with digital wallet company Strike to build the infrastructure.

Details are still light on how the cryptocurrency will be adopted in the country but the nation has also reportedly hired a team of experts in the field to build a financial system centred around Bitcoin.

“Adopting a natively digital currency as legal tender provides El Salvador the most secure, efficient and globally integrated open payments network in the world,” Strike found Jack Mallers said.

Law details
The law that was passed notes that prices can be shown in Bitcoin, tax contributions can be paid in Bitcoin, and exchanges will not be subject to paying capital gains tax.

However, for accounting purposes, the US Dollar will continue to be used as the reference currency.

“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 says.
Despite the positive sounds coming from the El Salvador president, some analysts are more cautious and suggest this is nothing more than a PR stunt.

“There is a lot of PR value in announcing something like this even if you haven’t worked out all the details,” said Digital Currency Global Initiative expert Rohan Grey.

At 09:10BST, Bitcoin is trading around $34,000, up around 3% in the last 24 hours.