El Salvador seeks to make bitcoin legal tender. If successful, it would be the first country to do so.
- El Salvador is considering creating a law to recognize bitcoin in the same way as the US dollar.
- The country is partnering with digital-wallet firm Strike to create the necessary infrastructure.
- The country's president said the move will generate jobs and provide financial inclusion.
El Salvador may become the first country to accept bitcoin as legal tender.
Reuters reported that the country's president, Nayib Bukele, was looking to introduce legislation that will recognize the cryptocurrency the same way as the US dollar, which the country currently uses.
Bukele made the comments at the Bitcoin 2021 Conference on Saturday. "Next week I will send to Congress a bill that will make bitcoin a legal tender," he said.
The leader said he would partner with digital-wallet company Strike to build the necessary financial infrastructure, using bitcoin technology.
His plan aims to assist Salvadorans living abroad in transferring funds home. "In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy," Bukele said.
-Nayib Bukele (@nayibbukele) June 6, 2021
Speaking about the announcement, Strike's CEO and founder, Jack Mallers, said: "Adopting a natively digital currency as legal tender provides El Salvador the most secure, efficient and globally integrated open payments network in the world," according to Reuters.
Mallers continued: "What's transformative here is that bitcoin is both the greatest reserve asset ever created and a superior monetary network. Holding bitcoin provides a way to protect developing economies from potential shocks of fiat currency inflation."
Bukele continued the discussion in a Twitter thread, where he said that bitcoin has a market cap of $680 billion dollars. "If 1% of it is invested in El Salvador, that would increase our GDP by 25%," he said. "On the other side, bitcoin will have 10 million potential new users and the fastest growing way to transfer 6 billion dollars a year in remittances."
Remittances are a key issue for a country where 70% of the population does not have a bank account, according to Bukele. "By using bitcoin, the amount received by more than a million low-income families will increase in the equivalent of billions of dollars every year," he said.
Western countries have generally been more enthusiastic than others about crypto but this is starting to change.
China, for example, has recently softened its stance towards bitcoin, as Insider's Isabelle Lee reported. Officials in the country are now calling the digital asset an "investment alternative" - a comment that Beijing insiders described as "progressive."
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