Bitcoin won't replace the U.S. dollar as official currency but businesses that can accept it now must
Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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El Salvador approves Bitcoin as legal tender – the first country to do so
CBC | Jun 9, 2021
Bitcoin won't replace the U.S. dollar as official currency but businesses that can accept it now must
El Salvador's legislative assembly has approved legislation making the cryptocurrency Bitcoin legal tender in the country, the first country to do so, just days after President Nayib Bukele made the proposal at a Bitcoin conference.
See: Right to anonymous payments
The digital currency can be used in any transaction and any business will have to accept payment in Bitcoin, with the exception of those lacking the technology to do so. The U.S. dollar will also continue to be El Salvador's currency and no one will be forced to pay in Bitcoin, according to the legislation approved late Tuesday.
The exchange rate between the two currencies will be established by the market and all prices will be able to be expressed in Bitcoin — although for accounting purposes, the dollar will continue to be the currency of reference.
The government will promote training for people to be able to carry out transactions using Bitcoin.
The Economy Ministry noted that 70 per cent of Salvadorans do not have access to traditional financial services and it said the country "needs to authorize the circulation of a digital currency [whose] who value exclusively follows free market criteria" to stimulate growth.
"The Bitcoin law is ambitious, but simple," Bukele said on Twitter. "Futhermore it is well structured to have zero risk for those who do not want to take risks. The government will guarantee the convertibility to the exact value in dollars at the moment of the transaction."
The president said it would increase financial inclusion, investment, tourism, innovation and economic development.
See: Bank of Canada to become new regulator of fintech companies doing payments processing
The law will take effect 90 days after its official publication. The Central Bank and financial system regulators will publish the implementing rules in the interim.
Bukele's New Ideas party holds a supermajority in the new congress seated May 1.
Other countries in the region, including Venezuela and the Bahamas, have introduced digital currencies, although none had adopted the original cryptocurrency, Bitcoin, itself.
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