El Salvador Passes Bill to Make Bitcoin Legal Tender

On June 9, 2021, the Legislative Assembly of El Salvador approved a bill that made bitcoin an official currency of the nation along side the US dollar, which has been the national currency up until this point and since 2001.

El Salvador passes bitcoin legal tender law
Courtesy Reuters

The idea was put forth by President Nayib Bukele and was eagerly voted in by the legislative assembly.

El Salvador
Members of the Legislative Assembly of El Salvador voting to pass the bitcoin legal tender bill

The law was very simple. Anything a Salvadorian could do with US dollars could now be done with bitcoin.

  • Vendors would be forced to accept it.
  • Citizens could pay their taxes with it.
  • Citizens could use it to remit money in and out of El Salvador.

Like all policies, there was both excitement and skepticism surrounding the decision.

Supporters stated that it may increase financial inclusion for the unbanked and facilitate remittances to and from El Salvador.

Opponents worried that because of bitcoin’s volatile price, many Salvadorians who put their savings into bitcoin might be harmed in a negative price movement.

Despite these reservations, El Salvador went ahead with its proposal to become the first nation in the world to accept bitcoin as legal tender.

The law went into effect on September 7, 2021, and to promote bitcoins usage, the government introduced a digital wallet named Chivo wherein every citizen could claim $30 of bitcoin.

El Salvadors bitcoin legal tender law goes into effect
Courtesy NPR

The law’s implementation hasn’t been without problems, though, including technical difficulties with the state-funded bitcoin wallet Chivo.

president nayib bukele tweets about chivo outage
This tweet is translated from Spanish. Link to the original tweet

The passing and enactment of the law also sparked minor protests from certain Salvadorian groups.