El Salvador may become the first country to make bitcoin legal tender, President Nayid Bukele announced Saturday, saying he would soon propose a bill that could transform the remittance-dependent economy.
The move would make the Central American nation the first in the world to formally accept the cryptocurrency as legal money and would “allow the financial inclusion of thousands of people who are outside the legal economy,” Bukele said.
“Next week, I will send to Congress a bill that makes Bitcoin legal money,” the populist leader said during a video message to the Bitcoin 2021 conference in Miami, Florida.
The bill aims to create jobs, he said, in a country where “70 percent of the population does not have a bank account and works in the informal economy.”
The El Salvador government is yet to give details of the bill, which will require approval from a parliament dominated by the president’s allies.
Remittances from Salvadorans working overseas represent a major chunk of the economy — equivalent to roughly 22 percent of Gross Domestic Product.
In 2020, remittances to the country totaled $5.9 billion, according to official reports.
According to Bukele, bitcoin represented “the fastest growing way to transfer” those billions of dollars in remittances and to prevent millions from being lost to intermediaries.
“Thanks to the use of bitcoin, the amount received by more than a million low-income families increases by several billion dollars every year,” said the president.
“This improves life and the future of millions of people.”
The cryptocurrency market grew to more than $2.5 trillion in mid-May 2020, according to the Coinmarketcap page, driven by interest from increasingly serious investors from Wall Street to Silicon Valley.
But the volatility of bitcoin — currently priced at $36,127 — and its murky legal status has raised questions about whether it could ever replace fiat currency in day-to-day transactions.