El Salvador has become the first country in the world to grant legal tender status to bitcoin.
A Reuters report said that a majority of lawmakers approved a bill, which was moved by President Nayib Bukele. The law will pave the way for the approval of bitcoin as legal tender in the South American country.
The President has backed the cryptocurrency‘s use in boosting the economy. El Salvador’s economy relies on remittances and those who are working abroad can send money back home in bitcoins.
“It will bring financial inclusion, investment, tourism, innovation and economic development for our country,” Bukele said in a tweet.
He added that the use of bitcoin, whose use will be optional, would not bring risks to users. Its use as legal tender will go into law in 90 days.
“The government will guarantee the convertibility to the exact value in dollars at the moment of each transaction,” Bukele said.
El Salvador’s dollarized economy relies heavily on money sent back from workers abroad. World Bank data showed remittances to the country made up nearly $6 billion or around a fifth of GDP in 2019, one of the highest ratios in the world.
Experts have said the move to bitcoin could complicate talks with the IMF, where El Salvador is seeking a more than $1 billion program.