El Salvador officially adopted Bitcoin as legal tender, becoming the first country to embrace Bitcoin as another circulating fiat currency alongside the US dollar.
El Salvador historically passed the “Bitcoin law” in June as the first nation worldwide. However, global financial institutions, such as IMF and the World Bank, were concerned if its implementation and even worried that its adoption may trigger further uncertain monetary or regulatory risks.
The dollarized economy in El Salvador is heavily reliant on remittances sent home by migrants overseas, which totalled $6 billion last year and accounted for roughly a fifth of gross domestic product, according to a Bloomberg report.
Promising $30 of bitcoin for each user, Bukele has pushed for its adoption, saying it will help Salvadorans save $400 million a year on commissions for remittances, while giving access to financial services to people with no bank account.
“We must break the paradigms of the past,” Bukele tweeted. “El Salvador has the right to advance towards the first world.”
Ahead of the launch, El Salvador bought 400 bitcoins worth around $20 million, Bukele said, helping drive its price above $52,000 for the first time since May. Hours later, bitcoin had weakened and last traded down 0.51% at $46,561.74.
Ethereum, another crypto currency, fell 0.32% to $3,404.05, while crypto exchange Coinbase Global slid 4.18% after reporting delays in some transactions on its platform.
The change means businesses should accept payment in bitcoin alongside the U.S. dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender.
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