El Salvador on Wednesday became the first nation in the entire world to officially grant legal tender status to cryptocurrency Bitcoin. A majority of the South American country's lawmakers gave their nod to a bill presented by President Nayib Bukele, which proposed embracing the world's highest-valued cryptocurrency as legal tender in the country. Bukele said that people who invest in Bitcoin in El Salvador will get citizenship in the country.
With 62 out of 84 possible votes, a huge majority of lawmakers of El Salvador voted in favour of President Bukele's initiative, according to a Reuters' report.
The majority of lawmakers have agreed to create a law that will officially adopt Bitcoin. However, there are concerns about the potential impact of this on El Salvador's program with the International Monetary Fund (IMF), the report said.
"The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out," the law reads.
Bukele has backed the cryptocurrency, explaining the use of Bitcoin will help Salvadorans living in foreign nations to send remittances back home. The US dollar is stated to continue as legal tender in the country.
"It will bring financial inclusion, investment, tourism, innovation and economic development for our country," Bukele said on Twitter shortly before the vote on the bill in Congress.
Bukele added that the use of Bitcoin, which will be optional, would not put users at risk. Bitcoin's use as legal tender will go into law in 90 days, Bukele explained. "The government will guarantee the convertibility to the exact value in dollars at the moment of each transaction," Bukele said.
The economy of El Salvador is dollarised and thus relies heavily on money sent back from workers abroad. In 2019, remittances to the country made up nearly $6 billion or around a fifth of GDP, according to World Bank data. This is one of the highest ratios in the world.