NewsBukele wants bitcoin to be legal tender in El...

Bukele wants bitcoin to be legal tender in El Salvador

El Salvador’s President Nayib Bukele said Monday that a “satellite infrastructure” will be built in the country for the use of Bitcoin in rural areas with connection problems.

“A satellite infrastructure will be built so that Salvadorans in rural areas can connect to the internet and the Bitcoin network in places where connectivity is poor,” the president posted on his Twitter.

He added that the Blockstream initiative “will contribute its technology to make the nation a model for the world.”

Bukele announced on Saturday that this week he will present to Congress a bill that seeks to make bitcoin legal tender in the country.

“Next week I will send to Congress a bill that will convert bitcoin into legal tender,” Bukele said in a video message presented at the Bitcoin 2021 conference that took place in the US city of Miami on 4 and 5 of June.

As explained by the president, the objective of this measure is to generate jobs and also “give financial inclusion to thousands of people outside the formal economy.” According to Bukele, “70% of the Salvadoran population does not have a bank account and works in the informal economy “.

“Financial inclusion is not only a moral imperative, but also a way to grow the country’s economy, providing access to credit, savings, investments and secure transactions,” said Bukele through his Twitter account.

The president has enough votes in Congress to approve the measure, which has generated conflicting opinions in the Central American country.

In El Salvador, the Salvadoran colón, which is no longer used, and the US dollar are legal tender. If the measure is materialized, it would become the first country in the world to adopt this cryptocurrency.

The Secretary of Commerce and Investments of El Salvador, Miguel Kattán, clarified on Monday that the US dollar will continue to be the legal tender in El Salvador and transactions with bitcoins will be optional.

The Salvadoran official added that bitcoin operations would be linked to the dollar exchange rate in the Central American country.

At the moment, the Salvadoran government has not provided further details about the proposed law regarding bitcoin that will be presented before Congress, dominated by President Bukele’s allies.

One of the uses that arise for this cryptoactive, according to the president, is the transfer of money remittances sent by Salvadorans in the United States to avoid the payment of commissions.

However, it has not been clarified how Salvadoran users would not pay the commissions that the same Bitcoin network establishes.

In the dollarized economy of El Salvador, the remittances that Salvadorans send from abroad are an important support and are equivalent to 22% of their Gross Domestic Product (GDP).

In 2020, remittances totaled $ 5,918.6 million, an increase of 4.8% over 2019, according to official reports.

The entry of remittances to the country between the last months of January and March totaled more than 1,705 million dollars, according to the Central Reserve Bank.

Bukele said that bitcoin also represents “the fastest growing way to transfer” those billions of dollars in remittances and to prevent “millions of dollars” from being lost to intermediaries.

“Through the use of bitcoin, the amount received by more than a million low-income families will increase by the equivalent of billions of dollars each year. This will improve the lives and futures of millions,” the president said.

Driven by interest from increasingly serious investors – from Wall Street to Silicon Valley – the crypto market grew to more than $ 2.5 trillion in mid-May 2020, according to the Coinmarketcap page, which collects data from almost 10,000 cryptocurrencies.

However, bitcoin, which is trading at around $ 39,587, suffers from swings, amid criticism from China for its use and comments from American tycoon Elon Musk, who uses it in his businesses.

The measures that El Salvador would take to prevent cryptocurrencies from being used for criminal activities, such as gang extortion, have not been indicated.

Salvador attracts initiatives

Following the announcement of Blockstream’s support, the president shared on his Twitter a message from Justin Sun, one of the founders of the Tron “blockchain” and CEO of BitTorrent.

“El Salvador is now a crypto nation,” he wrote, adding that Tron “will become the first crypto organization to establish an office in El Salvador.”

Sun posted on Sunday that “crypto investors and entrepreneurs will start moving to El Salvador.”

The Salvadoran president pledged that cryptocurrency investors will have “immediate permanent residence.”

He added that among the attractions that El Salvador has for these people is that it is “one of the few countries in the world without property taxes” and that it will not have a capital gains tax for Bitcoin as it is a legal tender.

Changpeng Zhao, CEO of the Binance crypto exchange platform, one of the largest in the world, was enthusiastic about the announcement.

With information from AFP, EFE and Reuters

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