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El Salvador Becomes First Country to Declare Bitcoin Legal Tender

By:
Chris Gaetano
Published Date:
Jun 9, 2021
Bitcoin

Cryptocurrencies, designed to operate outside the conventional nation-state system, received some support from one such system this week, as El Salvador became the first country to declare that Bitcoin will now be legal tender, CNN reported. The country already accepts the U.S. dollar as such. The new law says that "all economic agents" must accept the digital token as a form of payment when offered by the buyer of a good or service, and also that it can be used to pay taxes.

The president, Nayib Bukele, whom CNN described as a right-wing populist, said he plans to partner with private firm Strike to develop the infrastructure for using Bitcoin as an official currency. He said that the move would promote financial inclusion, tourism, innovation and economic development for the smallest country in Central America.

While El Salvador is the first to convert cryptocurrency into legal tender, China recently became the first country to convert legal tender into cryptocurrency with its new digital yuan (which, presumably, could also be used as legal tender). Unlike most other cryptocurrencies in circulation today, the digital yuan will be controlled by the country's central bank, which will be able to closely monitor the activities of Chinese citizens. That is because, unlike most other cryptocurrencies, it is not anonymous.

Not to be outdone, the U.S. Federal Reserve recently said that it had been studying its own entry into the digital asset world through the possible deployment of a digital dollar that would operate similarly to the digital yuan. Currently, though, the central bank has not decided one way or another to proceed.