Bitcoin Mandate: El Salvador to Accumulate $150 Million in BTC to Facilitate Crypto Transactions
The country has passed the bill to make Bitcoin legal tender with a supermajority and has become the first nation to adopt a cryptocurrency as legal tender.
El Salvador president Nayib Bukele has sent the bill to make Bitcoin legal tender in the country to Congress, which has been passed by a supermajority, 62 out of 84 votes, becoming the first nation to adopt a cryptocurrency as legal tender.
According to the bill, in order to facilitate the financial inclusion of its citizens in order to better guarantee their rights and promote the economic growth of the nation,
“It Is necessary to authorize the circulation of a digital currency whose value answers exclusively to free-market criteria, in order to increase national wealth for the benefit of the greatest number of inhabitants.”
After adopting the US Dollar as legal tender in 2000, the country will regulate the legal course of bitcoin. This means exchanges in bitcoin will not be subject to capital gains tax.
The bill aims to regulate Bitcoin as unrestricted legal tender with liberating power and unlimited in any transaction. The exchange rate between the USD and BTC will be freely established by the market.
It further proposes prices may be expressed in BTC, and taxes are allowed to be paid in it as well, but USD will be used as a reference currency for accounting purposes. Furthermore,
“every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service. “
The State will be providing instant convertibility from bitcoin to USD to the users who wish for the same or don’t have the technological capability while promoting the necessary training and mechanisms so that the population can access bitcoin transactions.
The government will be providing the infrastructure needed for this development in terms of apps, wallets, phones, and internet connections.
This decree will take effect ninety days after its publication in the Official Gazette.
President Bukele also appeared on Twitter Space, which was attended by thousands of people to share what exactly all of this means. He discussed using “cheap and clean” volcano energy to be used for Bitcoin mining.
The idea is to get people thinking in Bitcoin units instead of dollars, he said. Also, to attract investors, something which Bitcoin “replicates on steroids.”
He further disclosed that the development bank and not the central bank would hold $150 million in a trust fund as a starting amount. However, this accumulation will take time, and holding bitcoin in reserves isn’t ruled out either.