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Bitcoin became El Salvador's legal tender on September 7, 2021. New regulations allowing people to use the digital asset as a payment option for goods and services entered into force on Tuesday. El Salvador became the first country to adopt bitcoin as legal tender.
Nayib Bukele, the current president of El Salvador, tweeted on Monday that the country now holds 400 BTC and confirmed the purchase of 200 coins ahead of accepting the cryptocurrency as a legal tender. That brings the value of the country's crypto treasury to more than $20 million at current prices.
From now on, El Salvadorans can use BTC to buy land or pay taxes. Notably, tax liabilities are set in US dollars. According to Bukele, this will lower commission costs for billions of dollars sent home from abroad since bitcoin remittances will cost less.
The government will give away $30 in BTC to every citizen who downloads the government's new digital wallet app. This will help them boost the adoption of the volatile asset whose value increased above $64K in April from $10,250 two years ago. In June, lawmakers voted in favor of the move to create a law to adopt bitcoin, with 62 out of 84 possible votes.
"El Salvador will be starting a real-time demonstration of Gresham's law (bad money drives out good). Most people seem to want to hoard dollars and get rid of Bitcoin—Gresham's law in action, Paul Donovan, the Chief Economist of UBS Global Wealth Management, said.
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