The time has come: In El Salvador, Bitcoin will be legal tender from September 7th.
El Salvador is the first country in the world to make Bitcoin legal tender. The corresponding draft law, which Parliament passed on June 9th, will come into force tomorrow, September 7th. The content of the legal text includes the obligation to accept Bitcoin payments. If the technical conditions prevent BTC custody, the government offers “instant conversion into US dollars”. Since very few companies should have an adequate technical infrastructure at the beginning, the Salvadoran state could soon be sitting on a veritable digital gold treasure.
In order for as many traders as possible to include BTC in their day-to-day business in the medium term, the government of the Central American country is also committed to providing active support. For example, parliament has agreed to set up a $ 150 million trust fund to provide money for Bitcoin-related infrastructure projects. The so-called Chivo Wallet should also provide an initial spark for the historic decision. All residents of El Salvador who choose to download will receive $ 30 in BTC as starting credit – that’s roughly three times the average daily income.
Market observers pay special attention to Article 5 of the “Bitcoin Law”. It says:
“Exchange transactions with Bitcoin are not subject to capital gains tax, just like with all other legal tender”. Without this passage, the law would be a tax nightmare, as the price difference between every purchase and sale of Bitcoin could lead to possible tax transactions.
Article 4 also proves that the Salvadoran state is making BTC the first-class currency. It regulates that taxes can also be paid in BTC. In addition to Bitcoin, the US dollar remains legal tender – and is likely to make up the majority of the trading volume for the time being. Because as a nationwide survey has shown, 70 percent of the citizens of the country are critical of the Bitcoin law and the majority have no basic knowledge of BTC.
Expressions of solidarity on Reddit
It is almost idle to say, but on the Internet they celebrate the Salvadoran government for the Bitcoin law like a holiday and announce support. On September 4, for example, a post went viral calling on the community of over three million members to buy 30 US dollars in BTC on the day the law was introduced at 3 p.m. CST (11 p.m. German time).
Assuming every member of r / Bitcoin follows the call, this would result in a trading volume of almost 100 million US dollars. With a daily global trade volume in the double-digit billions, that would of course only be a drop in the ocean.
It is more important to look at large companies. For in El Salvador, corporations such as VW, McDonalds, Sheraton and Coca-Cola are active – in the near future, all of these companies will have to think about how to incorporate Bitcoin acceptance into their business activities. It remains to be seen whether and how the new currency will be accepted.