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El Salvador is the first country to adopt bitcoin as legal tender

In El Salvador, a majority of lawmakers approved a proposal brought forth by Salvadorian President Nayib Bukele that allows bitcoin to be used as legal tender in the country alongside the US dollar, becoming the first country to do so. The new law stated that all economic agents are required to accept bitcoin as a form of payment when it is offered by the purchaser of a good or service. Tax payments may also be made in bitcoin, according to the legislation. Bukele is a right-wing populist who took office in  2019. Bukele has always supported bitcoin and previously stated that El Salvador would partner with digital finance company Strike to establish the required infrastructure to support the use of bitcoin as an official currency.

Giving the currency legal tender status means that it can be used by borrowers to repay debts, it doesn’t necessarily mean that individuals or businesses are required to accept the currency as payment. Bukele stated that the move would promote financial inclusion, tourism, innovation, and economic development after taking a blow due to the Covid-19 pandemic. Central banks across the world have been hesitant to embrace cryptocurrency due to its volatility. Earlier this year, the currency dropped by more than half of its value after reaching a record high above $60,000.

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