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GOLDBUFFALO   Wednesday, 06/09/21 04:13:45 AM
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In what could be the start of a seismic shift of fortunes for Bitcoin holders around the world, President Nayib Bukele’s proposal to adopt Bitcoin as El Salvador’s national currency is on the brink of becoming reality as the country’s unicameral legislative assembly voted overwhelmingly in favor of his bill, just hours after it was introduced late Tuesday night.

Last Saturday, at Bitcoin 2021 in Miami, Bukele announced in a pre-recorded video that El Salvador was in the process of adopting Bitcoin as legal tender — a move that would make the Central American country the first in the world to classify BTC as an official national currency. With Bukele’s political party — Nuevas Ideas — holding a supermajority of the legislative assembly, the bill passed easily, with 60 out of 84 possible votes. The bill will now be sent back to Bukele to sign into law within the next 10 days.

As Bukele himself introduced the law, it now seems incredibly unlikely that he would veto the legislation.

El Salvador — one of the smallest countries in Central America — has a population of 6.4 million, with over 1.5 million Salvadorans living abroad. Crime and violence have not only dragged down the nation’s economic growth but also spurred Salvadorans to migrate. In 2020, El Salvador’s GDP contracted by 8.7% but economic growth is expected to be 4.9%in 2021 according to the World Bank.

“70% of people in El Salvador do not have bank accounts. Thanks to Bitcoin they will never need them,” Edan Yago, co-founder at Sovryn, a leading protocol for DeFi on Bitcoin, told Forkast.News in an email. “El Salvador will leapfrog our increasingly corrupt monetary and financial systems and be among the first people to benefit from a more transparent, more secure system.”

El Salvador’s moves to make Bitcoin legal tender will likely have important consequences for Bitcoin investors worldwide. Bukele’s initial announcement has already appeared to trigger a domino effect in the Americas, with politicians in Panama, Brazil, Argentina and Paraguay reportedly now also looking to follow El Salvador on adopting Bitcoin as their national currency.

“Bitcoin holders will soon be in a position to argue that financial regulators and tax authorities around the world should now recognize BTC as a foreign currency. That could affect how the profits from Bitcoin investments will be taxed.” said Ulrik K.Lykke, executive director at digital assets hedge fund ARK36, in an interview with Forkast.News in an interview. “As spending BTC would no longer be a taxable event if it gains a foreign currency status, it could be an incentive for a new wave of investors to consider diversifying their portfolios into Bitcoin. It could also encourage more institutions to hold BTC on their balance sheets.”


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