El Salvador has become the first country to accept bitcoin as legal tender following the approval of a new law.
The country’s lawmakers ratified a proposal from president Nayib Bukele to give the cryptocurrency legal tender status alongside the US dollar in 90 days' time.
Bitcoin value rockets
As a result of the legal decision, the value of bitcoin had shot up by almost 7% in 24 hours to US$37,839, according to CoinDesk.
The new law states “all economic agents shall accept bitcoin as a form of payment when it is offered by the purchaser for a good or service,” and the move is seen as essential to El Salvador’s economy as it is considered by the San Salvador government to be a facilitator for tourism and innovation.
As there is no need to open a bank account because cryptocurrencies are held in a digital wallet, it is seen as good for financial inclusion, which is important in what is one of the poorest countries in the Americas.
More than two million Salvadorans live outside the country, and the country’s economy relies on money sent home from abroad. Bitcoin is expected to make the transfer of funds easier in the future.
History in the making
President Bukele posted a message welcoming the news on Twitter. He said: “The #BitcoinLaw has been approved by a supermajority in the Salvadoran Congress, 62 out of 84 votes! History!”