El Salvador has become the first country in the world to officially classify Bitcoin as legal currency.
Congress approved President Nayib Bukele’s proposal to embrace the cryptocurrency, with 62 out of 84 possible votes on Tuesday night meaning Bitcoin will become legal tender, alongside the US dollar, in 90 days.
The president said the government had made history, stating that the move would make it easier for Salvadoreans living abroad to send money home.
The new law means every business must accept Bitcoin as legal tender for goods or services, unless it is unable to provide the technology needed to do the transaction.
President Bukele shortly before the vote said It will bring financial inclusion, investment, tourism, innovation and economic development for our the country.
He has previously said the move will open up financial services to the 70% of Salvadoreans who do not have bank accounts.
El Salvador’s economy relies heavily on remittances, or money sent home from abroad, which make up around 20% of the country’s gross domestic product (GDP).
More than two million Salvadoreans live outside the country, but they continue to keep close ties to their place of birth, sending back more than $4bn each year.
Bitcoin, a virtual asset with no direct connection to the real economy, has seen large fluctuations in value over the years.
Most of the world’s central banks are looking into the possibility of creating their own digital currencies. In April, the Bank of England announced it was looking into creating a digital money that would exist alongside cash and bank deposits.
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