Author | Qin Xiaofeng

Editor | Hao Fangzhou

Produced | Odaily

Editor | Hao Fangzhou

Produced | Odaily

Beijing time today (June 9) morning, President Nayib Bukele of El Salvador issued a document saying that he had submitted a draft bill to the country's legislature, requiring Bitcoin to become the country's legal tender. At noon, Nayib Bukele said the bill was currently being debated but with his party holding 64 of the 84 seats there was almost a "100% chance" of its passing and he expected he would be due later tonight. Sign the law first sometime or tomorrow.image descriptionThe bill will come into force within 90 days of its publication in the Official Gazette, which also means that,

El Salvador to Be First Sovereign Country to Adopt Bitcoin as Fiat Tender

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Draft signed by Nayib Bukele

However, Miguel Kattán, El Salvador’s minister of commerce and investment, said in local newspaper El Mundo on Monday: “The U.S. dollar will continue to be the legal tender in El Salvador. Daily operations can be settled in bitcoin and, of course, in bitcoin.” relative to its dollar value."

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El Salvador Embraces Bitcoin and Crypto Finance

In terms of implementation details, according to the requirements of the bill, after Bitcoin becomes a legal tender, commodity prices can be expressed in Bitcoin; any economic entity must accept Bitcoin as payment; Bitcoin transactions will not be subject to capital gains tax and can be encrypted Currency for tax payment.

Also, due to the volatility of bitcoin prices, the US dollar will be used as a reference currency for accounting purposes; the exchange rate between bitcoin and US dollars will be freely determined by the market. Before the bill comes into force, officials will guarantee the automatic and instant exchange of bitcoins for dollars by establishing a trust fund at the Development Bank of El Salvador (BANDESAL). Nayib Bukele revealed that the government intends to hold the equivalent of $150 million in bitcoins in trust funds to take on the risk of merchants.

The bill also assigns responsibilities to the Salvadoran state authorities. The government should provide necessary training and mechanisms to enable people to obtain Bitcoin through transactions; the Central Reserve Bank and the Financial Supervisory Authority should issue corresponding regulations and implementation bills within the specified time limit.Recently, the figure of El Salvador, a small country in Central America, has frequently appeared in the encryption market. At the Bitcoin 2021 conference last weekend, President Nayib Bukele of El Salvador attended through the Zoom cloud. At the time, Nayib Bukele revealed that he was planning to submit a bill to recognize bitcoin as legal tender. The bill has also attracted attention in the crypto market as Bukele's newcomer party holds a majority of seats in Congress and its approval is almost a foregone conclusion.

Nayib Bukele took it personally and changed his avatar to a photo of laser eyes on his Twitter account to spread the word about Bitcoin.

(Odaily Note: Retinazer is a Bitcoin communication stalk that Twitter has risen this year.)

(Nayib Bukele, President of El Salvador)

In addition to turning Bitcoin into legal tender, El Salvador is also friendly to investors in the crypto market. Nayib Bukele has said that El Salvador will offer instant permanent residency to crypto entrepreneurs. "Those who invest 3 BTC in El Salvador will be able to obtain permanent residency." This news has also been widely forwarded by a group of influential figures in encrypted finance such as Binance founder CZ (Zhao Changpeng) and wave field founder Sun Yuchen.

After the bill was passed today, Justin Sun posted on Weibo, saying: "I am now a glorious holder of El Salvador's legal currency. I am firmly optimistic about the development prospects of El Salvador and plan to exchange all the US dollars I hold in the future for the local legal currency of El Salvador."

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Why is El Salvador taking the first step?

If it weren't for today's Bitcoin legalization bill, many people might not have heard of El Salvador.

As a small coastal country in Central America, El Salvador has a national area of ​​only 21,300 square kilometers, roughly equivalent to the combined area of ​​Beijing and Shanghai; its population is less than 7 million, less than one-third of Beijing's permanent population.

In terms of politics, El Salvador has been under colonial rule for a long time in history. After independence, coups and dictatorships continued to emerge in endlessly until the armistice was negotiated in 1992. In terms of economy, it is dominated by agriculture, mainly rich in coffee and cotton, and the annual growth rate of GDP is less than 2%. , a truly backward region; in terms of currency, El Salvador has no sovereign currency and has always relied on the US dollar for settlement.

Sailing on the sea depends on the helmsman, and El Salvador can be at the forefront of the encrypted financial market, thanks to the current president Nayib Bukele. Hipotecario Nayib Bukele, 39, is a member of the Grand Alliance of National Unity (GANA), a reformist party that aims to change the country's backwardness and won the presidential election in 2019. After taking office, Nayib Bukele has continued to practice the New Deal in the political and economic fields, focusing on improving infrastructure.

Since El Salvador is a cash-based economy, approximately 70% of the population does not have bank accounts or credit cards. Existing services charge 10 percent or more for international transfers, sometimes taking days to arrive and sometimes requiring in-person withdrawals.

It also started using RippleNet for real-time cross-border payments in March this year.

As Bitcoin has attracted more and more attention from financial and technological people this year, Nayib Bukele also realized that this will be an excellent window for external display. El Salvador can use its policy advantages to attract overseas hot money to settle in El Salvador with the help of virtual assets such as Bitcoin, thereby driving the country's development and economic growth. This led to the introduction of today's bill on the synthesis of bitcoin into legal tender.

"El Salvador" means "savior" in Spanish. Whether Nayib Bukele's new policy will become the "savior" of the country's economy will be left to the test of time.

Central America Becomes the New Paradise for Crypto Finance

In fact, in addition to Nayib Bukele from El Salvador, there are also many central and South American housekeepers who expressed great interest in Bitcoin, including Paraguay Congressman Carlitos Rejala, Panama Congressman Gabriel Silva, Argentina Representative Francisco Sánchez of Neuquén, Brazil Fábio Maia Ostermann, elected member of the Legislative Assembly of Rio Grande do Sul, Jehudi Castro Sierra, Colombian Presidential Advisor and Undersecretary of the Ministry of Digital Economy, Indira Kempis Martinez, Majority Senator from Nuevo Leon, Mexico, and Julio Eduardo Clavijo Acosta, Ecuador's Undersecretary for Economic Inclusion .

Moreover, these countries all have the same commonality: they have been colonized and are currently economically underdeveloped, without financial burdens; inflation is serious, and the credibility of their sovereign currencies is weak. Therefore, they are more open and inclusive to encrypted finance.

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(Venezuela implements petro currency)