On Wednesday, June 9, El Salvador’s legislative Enacts Bitcoin Law assembly made history by formally Enacts Bitcoin Law bitcoin as legal tender, with nearly three-fourths of the legislature voting in favor.
If the new law works as intended, it has the potential to transform El Salvador into one of the world’s most important financial centers, and to affect the way people around the globe use digital currencies.
How the Salvadoran bitcoin standard will work
According to the legislative text, under the new law “every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service”: a straightforward definition of what it means to be a legal currency.
“Tax contributions can be paid in bitcoin,” along with all other legal obligations, and “exchanges in bitcoin will not be subject to capital gains tax, just like any legal tender.” And “obligations in many expressed in U.S. dollars, existing before the effective date of this law, may be paid in bitcoin.”
The U.S. dollar will also remain legal tender in the country, and be used as the “reference currency” for accounting purposes.Enacts Bitcoin Law
The bill anticipates a lot of the practical considerations involved with adopting bitcoin as legal tender.