Is Bitcoin A Official Legal Tender?
Only in El Salvador. More countries will follow.
The Central American country of El Salvador is not known as an economic hotspot in the world. Still, it is now taking on a pioneering role: Bitcoin has been a legal tender since Tuesday, September 7, 2021. It is a big step for the small country — it took a similarly significant step exactly 20 years ago. In 2001 under the government of President Francisco Flores, the Law of Monetary Integration went into effect. It allowed the free circulation of the U.S. dollar in the country (see dollarization), with a fixed exchange rate of 8.75 colones. Since then, the country has been dependent on the monetary policy of the U.S. Federal Reserve.
With the entry into force of a corresponding law on Tuesday, the Central American state became the first country in the world to take this step. The law stipulates that any merchant who is technically capable of doing so must accept Bitcoin as a payment method.
Tax
No capital gains tax is to be levied on Bitcoin exchanges in El Salvador, a country of about six million people. The exchange rate to the dollar, which is used as an official means of payment there instead of a local currency, is freely decided by the market. Other tax payments that have to be paid by the citizens and residents there can, of course, now also be paid in the form of bitcoin. Probably also in the future with other alternatives.
Wallet
Those who download the Chivo App, a digital wallet, will receive a starting credit worth $30 (25 euros), according to Bukele (President of El Salvador). There are also to be 200 Chivo ATMs for buying more Bitcoins or to receive and exchange in US Dollars.
400 Bitcoins
State President Nayib Bukele announced on Twitter that the country had bought its first 400 Bitcoin (the current equivalent of around 17.6 million euros).
