Dumping Dollars for Bitcoin, El Salvador Leads the Way

The Congress of El Salvador has approved a law that will classify Bitcoin as legal tender in the Central American country, its president said, making it the world's first nation to adopt a cryptocurrency.

"The #BitcoinLaw has just been approved by a qualified majority" in the legislative assembly, President Nayib Bukele tweeted after the vote late Tuesday.

"History!" the president added.

He said a majority of 62 out of 84 lawmakers approved the bill, which he proposed last week.

The law passed with the support of Bukele's allies despite minority opposition parties -- who had criticised the speed of the vote -- refusing to back it.

Before the vote, Bukele said adopting the cryptocurrency would bring "financial inclusion, investment, tourism, innovation and economic development" to the country.

The Salvadoran leader has hailed bitcoin as "the fastest growing way to transfer" billions of dollars in remittances and to prevent millions from being lost to intermediaries.

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.

"This is a law that will put El Salvador on the world's radar, we will be more attractive for foreign investment," Romeo Auerbach, deputy of the Grand Alliance for National Unity party, an ally of Bukele, said.

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 $33,814 -- and its murky legal status has raised questions about whether it could ever replace traditional currency in day-to-day transactions.