Bitcoin, which has had its struggles lately, got a firm thumbs-up from El Salvador on Wednesday, after lawmakers in the Central American nation voted to approve the cryptocurrency as legal tender.
It is believed to be the first country in the world to do so.
President Nayib Bukele tweeted in the early hours of Wednesday that legislators had voted in favor of the bill to formally adopt bitcoin with 62 out of a possible 84 votes.
“History BTC!” Bukele tweeted.
Hours earlier he announced on Twitter
that he had just sent the Bitcoin Law to Congress. Article 1 of that reads: “The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out.”
The law also states that prices can be expressed in bitcoin, taxes can be paid in the cryptocurrency and “every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.” As well, the exchange rate between bitcoin and the U.S. dollar will be “freely established by the market,” the document read.
In a Twitter thread a few days ago, Bukele explained the advantage of having bitcoin as legal tender, including how it can help many of those in his country who regularly send money back home. He noted that 70% of the population doesn’t have a bank account and work in “the informal economy.”
El Salvador could be the first of several countries to adopt bitcoin as legal tender, according to Matthew Le Merle, managing partner at Blockchain Coinvestors, a venture capital fund of funds.
“We expect many governments of smaller countries to embrace bitcoin. They are not held back by issues such as their currency being a contender for global reserve currency, their central bankers being able to move markets and their banks being global leaders with vested interests to protect.”
“For smaller countries, bitcoin is a superior solution to their own fiat currency in many ways,” he added
However, some raised the volatility of the world’s No. 1 crypto asset as a potential concern for Salvadorans who may end up using bitcoin daily.
will officially become legal tender 90 days after appearing in the country’s Diario Oficial, in which all documents ordered by law are published.
The cryptocurrency was trading modestly higher at $34,112. Bitcoin has lost about 37% in the space of a month and 39% over three months, well off its highs of over $64,000 reached in April.
Bitcoin has also lost 8% this week so far, some attributing the selloff of it and other digital assets partly to news earlier in the week that U.S. authorities recovered some $2.3 million in bitcoin paid to the cyberhackers of Colonial Pipeline last month.
Among those who are seeing further downside for the No. 1 cryptocurrency is Oanda’s senior market analyst Jeffrey Halley. In a note to clients on Tuesday, he said its recent fall through $35,000 triggered a downside breakout.
“The breakout has a target of $22,000.00, which could happen in the next few days. Failure of $30,000.00 will basically put every long position since January 1st in the red, which I believe, will trigger another capitulation trade,” he said.