After El Salvador, Latin America May Enter the Era of Cryptocurrencies

Bitcoin as a legal tender is just the first step toward a central bank digital currency (CBDC).

After El Salvador, Latin America May Enter the Era of Cryptocurrencies

The bill was approved four days after Salvadoran President Nayib Bukele announced plans to make bitcoin legal tender, making El Salvador the first country in the world to officially adopt cryptocurrency as legal tender. Salvadoran President Nayib Bukele tweeted that the Bitcoin Law was passed by an “absolute majority” of the Salvadoran Congress on June 9, making the country the first in the world to officially adopt Bitcoin as legal tender ……

President Bukele, 39, who is known for breaking the mold, tweeted that 62 of the 84 lawmakers voted in favor of the proposal. Meanwhile, El Salvador’s legislative assembly also tweeted the approval of the new bill.

Bitcoin as legal tender is just the first step toward a central bank digital currency (CBDC),” said Josh Li, chief commercial officer of Roxe Inc. “The CBDC will enable cryptocurrencies to become the primary catalyst for mainstreaming domestic and cross-border payments. With the right technology, CBDC will not only make payments faster and less costly, but also allow for greater interoperability between payment platforms and various financial institutions.”

At the Bitcoin 2021 conference in Miami, President Nayib Bukele had announced via video that he would introduce a bill to make Bitcoin a legal tender in El Salvador.

On June 5, President Nayib Bukele said in the video, “In the short term, this will create jobs and provide financial inclusion to thousands of informal economies.”

In a June 8 interview with state television, Douglas Rodriguez, the governor of El Salvador’s central bank, said bitcoin is already in use in the country and that “people don’t need to be afraid of it,” adding that bitcoin will not replace the U.S. dollar.

The official document submitted by Nayib Bukele to the Legislative Assembly of the Republic of El Salvador states that “in order to promote the country’s economic growth, it is necessary to approve the circulation of a digital currency whose value is fully compatible with free market standards and capable of increasing the country’s wealth for the benefit of the largest number of inhabitants.”

The legal document states that the exchange rate between bitcoin and the U.S. dollar will be freely determined by the market, prices can be denominated in bitcoin, and taxes can be paid in bitcoin.

The aforementioned document mentions that the law will take effect within 90 days of its publication by the government. There is no official announcement on whether the newly approved law has been published in the gazette, but most of them are published every business day.

Latin America Enters the Era of Cryptocurrencies

While El Salvador officially announced the adoption of Bitcoin as legal tender, other countries in Latin America have also shown support for the adoption of Bitcoin as legal tender.

Politicians from Brazil, Paraguay, Panama, Argentina and Mexico have expressed their interest and support for cryptocurrencies as well.

A day after a video of Nayib Bukele announcing Bitcoin legislation aired, Paraguayan congressman Carlitos Rejala joined in, becoming the first Latin American politician after El Salvador to express interest in adopting cryptocurrencies.

In a tweet, Rejala said, “As I said a long time ago, our country needs to move hand in hand with the new era. This week we will start an important project related to Bitcoin that will put Paraguay at the forefront of innovation in the world!” The tweet was accompanied by a photo of Rejala with laser eyes, signifying support for Bitcoin.

In response to Nayib Bukele’s tweet on June 7, Panamanian Congressman Gabriel Silva said, “It’s important, Panama can’t fall behind. If we want to be a true center of technology and entrepreneurship, we must support cryptocurrencies.” Rep. Silva added, “We will prepare a proposal related to Bitcoin for the Congress,” but did not disclose further details.

Brazilian MP for Rio Grande do Sul Fabio Ostermann, Brazilian federal MP Gilson Marques and Mexico City Senator Indira Kempis also posted photos of themselves with laser eyes, demonstrating their independent support for Bitcoin.

Iran Opposes Digital Assets

In the Middle East, far from Latin America, Iranian President Hassan Rouhani has taken a different stance on digital assets. instead of expressing support, President Hassan Rouhani discussed the need to preserve and protect national interests in the field of digital currencies and cryptocurrency activities.

On June 8, President Hassan Rouhani said that the risks of cryptocurrency transactions must be considered, adding, “In order to legalize cryptocurrency activities and protect the security of people’s capital in this field, we must come up with solutions as soon as possible and develop and communicate the necessary laws and instructions.” He added: “Cryptocurrency mining activities are strictly prohibited until the end of summer and the Ministry of Communications and Information Technology and the Ministry of Energy are responsible for cutting off power to these centers.”

In May, Iran’s Energy Ministry said that cryptocurrency mining is banned nationwide until September due to the increase in domestic electricity consumption during the hot summer months, that cryptocurrency mining with civilian household electricity is illegal and that heavy fines will be imposed if home miners are found.

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