El Salvador May Accept Bitcoin as Legal Tender. What Does This Mean?
El Salvador May Accept Bitcoin as Legal Tender. What Does This Mean?
The world of cryptocurrency received some shocking news on June 5, 2021, when the President of El Salvador announced that he would propose a bill that would make Bitcoin legal tender in his country. This announcement came during the big Bitcoin conference in Miami. While the announcement did not move the price of Bitcoin, passage of the bill may lead to a major impact on the cryptocurrency price.
A First For Bitcoin
Over the past year, Bitcoin has seen a surge in acceptance in adaptability. This year alone, both Paypal and Square have announced that they would allow their clients to use Bitcoin in their accounts. However, not many cryptocurrency investors were expecting Bitcoin to be adopted as legal tender so early in Bitcoin’s lifecycle. The announcement by the President of El Salvador could change the way many people look at Bitcoin.
Bitcoin Can Be Accepted as Legal Tender
So what does it mean that Bitcoin can be accepted as legal tender in El Salvador? This means that anyone in El Salvador can purchase goods and services using Bitcoin. Bitcoin can also be used as a legal store of wealth. However, the biggest impact of Bitcoin being legal tender is that there would be no capital gains tax on Bitcoin.
How Salvadorians Can Benefit from Bitcoin As Legal Tender
Right now, 70% of Salvadorans do not have a bank account. Therefore, Bitcoin can be the ideal way for any citizen in El Salvador to essentially have their own bank. With Bitcoin having legal tender, they can hold their wealth in the cryptocurrency and transfer it anywhere in the world.
Another benefit for Salvadorians is that they would not have to deal with the possible instability of having their money in a bank in the developing world. Many people in developing countries are leery of keeping their money in banks due to past currency crashes and financial collapses. Also, Salvadorians would not have to pay an intermediary to transfer their money when using Bitcoin.
El Salvador May Become a Destination for Bitcoin Holders
If Bitcoin can become legal tender in El Salvador, then the country could become a haven for Bitcoin holders who will want to avoid paying capital gains tax on their cryptocurrency. In fact, the President of El Salvador stated that if just 1% of Bitcoin were invested in El Salvador, the GDP of the country would surge by 25%.
Is El Salvador the First of Many Countries to Accept Bitcoin?
It is too early to sell if the President of El Salvador will be able to push the Bitcoin legal tender bill through congress. However, it appears that it is only a matter of time before more and more countries begin to make Bitcoin legal tender in their own countries. When that happens, the upside in Bitcoin may become limitless.
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