EL SALVADOR will become the first country in the world to officially adopt Bitcoin as legal currency.
Lawmakers in the nation’s Congress passed a bill that will allow the cryptocurrency to be used for many aspects of daily life, from property purchases to tax contributions.
The new law means every business must accept Bitcoin as legal tender for goods or services, unless it is unable to provide the technology needed to do the transaction.
President Nayib Bukele, said that the government had now made history, and that the move would make it easier for Salvadorans living abroad to send money home.
Writing on Twitter he added: “It will bring financial inclusion, investment, tourism, innovation and economic development for our country.”
The President has previously said the move will open up financial services to the 70 per cent of Salvadorans who do not have bank accounts.
Bitcoin is already in use in some areas of the country, but will now become legal tender, alongside the US dollar, in 90 days.
Cryptocurrencies have soared in popularity due to their use as a store of value compared to investing on the regular stock exchanges of the world.
Both the volatility of bitcoin, currently priced at $33,814, and its questionable legal status have raised questions about whether it could ever replace traditional currency in day-to-day transactions.
But El Salvador, a small nation where four out of 10 people live in poverty, has turned to the top crypto asset in a bid to boost its remittance-reliant economy.
Currently, remittances, or money sent home from abroad, make up around 20 per cent of the country’s gross domestic product (GDP).
According to reports, more than two million Salvadorans live outside the country, but they continue to keep close ties to their place of birth, sending back more than $4bn (£2.8bn) each year.
The President had previously hailed the virtual currency as “the fastest growing way to transfer” billions of dollars in remittances to prevent millions from being lost to intermediaries.
“This is a law that will put El Salvador on the world’s radar, we will be more attractive for foreign investment,” Romeo Auerbach, deputy of the Grand Alliance for National Unity party, an ally of Bukele, said.
“Thanks to the use of Bitcoin, the amount received by more than a million low-income families increases by several billion dollars every year.
“This improves life and the future of millions of people,” he added.
The Congress vote happened on the same day that former US President Donald Trump said that Bitcoin was a “scam against the dollar.”
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“I don’t like it because it’s another currency competing against the dollar,” he told Fox Business.
He added that he wanted the dollar to be “the currency of the world.”