In a development that sees Bitcoin gaining increasing traction in the financial world, El Salvador’s President Nayib Bukele announced during a national address that the country has passed a bill making bitcoin legal tender with effect from September 7 2021; use of the cryptocurrency will be optional.
The country’s Congress has already approved Bukele’s proposal to embrace the cryptocurrency, making El Salvador the first country in the world to adopt bitcoin as legal tender.
“The use of bitcoin will be optional, nobody will receive bitcoin if they don’t want it… If someone receives a payment in bitcoin they can choose to automatically receive it in dollars,” said Bukele while adding, salaries and pensions will continue to be paid in U.S. dollars.
Bukele did not clarify if that included salaries paid to state workers and private sector employees.
In a separate statement Athena Bitcoin said, it plans on investing more than $1 million to install some 1,500 cryptocurrency ATMs in El Salvador, especially where residents receive remittances from abroad. The ATMs can be used to buy bitcoins or sell them for cash.
“One of the reasons we passed the bitcoin law is precisely to help people who send remittances,” said Bukele while adding the high costs of commissions traditionally associated with sending money home would be eliminated by using Bitcoin.
El Salvador relies heavily on remittances sent from abroad. World Bank data showed remittances to the country made up nearly $6 billion or around a fifth of gross domestic product (GDP) in 2019, one of the highest ratios in the world.
According to U.S payments and fintech analyst at Autonomous Research, Kenneth Suchoski, less than 1% of the volume of global cross-border remittances are currently in cryptocurrency. In the future crypto is expected to account for a larger slice of the more than $500 billion in global annual remittances.