Naibb Bukele, President of El Salvador, addresses Congress at the Legislative Assembly Building in San Salvador, El Salvador, on Tuesday, June 1, 2021. Photographer: Camilo Friedman / Bloomberg via Getty Images
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El Salvador President Nayib Bukele has sent a law to the country̵
If approved by the legislature, El Salvador will become the first country in the world to give cryptocurrency this status.
Bukele posted a screenshot of the Bitcoin Act in a tweet on Wednesday.
“The purpose of this law is to regulate bitcoins as an unlimited legal tender with a release force, unlimited in any transaction, and on any title that public or private individuals or legal entities are required to comply with,” the law states.
If the law is passed, prices can be displayed in bitcoin, tax contributions can be paid in digital currency, and bitcoin exchanges will not be subject to capital gains tax.
Bitcoin is known for wild price fluctuations, which have led critics to suggest that it is not appropriate to be an efficient currency. It is not yet clear how El Salvador will eventually release bitcoins as legal tender.
The exchange rate with the US dollar “will be set freely by the market”, according to the proposed law. El Salvador’s current official currency is the US dollar.
The law also says the state will “promote the necessary training and mechanisms so that the population has access to bitcoin transactions.”
Approximately 70% of El Salvador does not have access to traditional financial services under the Bitcoin Act. Cryptocurrency is seen as a way to increase financial inclusion.
The proposal will have to go through El Salvador’s legislative process before it can be passed as law.
Bukele’s move to bring the law to Congress comes after he announced last week that El Salvador has partnered with digital wallet company Strike to build the country’s modern financial infrastructure using bitcoin technology.
Bitcoin reached a record high of $ 64,829.14 in April, but has fallen by almost half since then, according to CoinDesk. It has still grown by over 230% in the last 12 months. This growth is due to a number of factors, including growing interest from institutional investors and large companies such as Tesla and Square buying bitcoins.