First Country to Use Bitcoin as Legal Tender

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El Salvador is the first country to adopt Bitcoin as legal tender and uses cryptocurrency for all transactions, alongside the US dollar. Large-scale protests took place in opposition to the decision fearing it would cause instability and inflation in the improvised Latin American Country. The IMF International Monetary Fund asked the country to reverse its decision by making Bitcoin a legal tender, in a result bitcoin lost half of its value in November.  

When El-Salvador introduced the cryptocurrency as legal tender, the government released a new digital wallet app, crediting $30 to every citizen in their Bitcoin accounts, and more than 200 new cash machines were installed in the country.

El- Salvador Crypto Regulations 2022

07-04-2022: Samson Mow’s new company JAN3 helps to build Bitcoin City in the Country.

Samson Wow Bitcoin entrepreneur has launched a new company called JAN3, raising $21M in funding and a valuation of $100M. JAN3  will concentrate on boosting the Bitcoin adoption, said former CHief strategy officer Blockstream and founder of Pixelmatric of Samson Wow.

08-03-2022: El-Salvador becoming a tax haven country of crypto.

Joe Biden signed a positive executive order on crypto to set up the current financial payment infrastructure. El-Salvador is the king of crypto-friendly countries, which adopted Bitcoin as legal tender in 2021 justifying no income or capital gain tax on Bitcoin.

24-03-2022: El-Salvador approached Binance for help on Bitcoin adoption.

The country is seeking support from Binance to implement Bitcoin as legal tender and issuance of bitcoin bonds. The Central American country’s ambassador said to the US .

22-03-2022: Exploring DeFi and Crypto Financial System in El-Salvador.

El-Salvador finalizes plans to issue its first-ever $1billion Bitcoin-backed bonds, the Blockchain community builds a bridge between traditional finance (TradFi) and decentralized finance (DeFi) spaces. 

30-01-2022: El- Salvador is way into the top countries by the number of BItcoin ATMs.

The Salvadoran Government has installed around 200 ATMs after adopting the bItcoin as legal tender and the country is standing at the third-largest network of crypto ATMs  after US and Canada.

Government stance on crypto

El-Salvador is requested by the IMF to remove as bitcoin legal tender as in El-Salvador the Bitcoin is accepted for all possible transactions done in the country. wherein September El-Salvador became the very first country to allow people to use the virtual currency in all transactions in cooperation with the US dollar.

The International Monetary Fund (IMF) warns the President of El-Salvador Nyib Bukele about the risks cryptocurrency poses in the country, stressing the difficulties to get loans from institutions.

The World Bank has warned Salvador’s government over its Bitcoin adoption as Salvadorians are not prepared for the move yet. which in turn is called an “attention-seeking – move” from an “authoritative regime” an analysis says. 

Businesses in the country will accept crypto or the US dollar as the country’s other official currency as payment under El-Salvador’s Bitcoin Law. Further, the government has installed more than 200 new cash ATM machines in the country to enable the conversion of dollars into Bitcoin. In addition, offering Salvadorians free $30 bitcoins in their national wallet through an online app.

Taxation of Crypto

The Bitcoin city El-Salvador does not burden crypto with any tax except for value-added tax(VAT). President Nayib Bukele announces his plan of building the first tax-free Bitcoin city, initially funded by Bitcoin-backed bonds, and fuel crypto investments in the Central American country.

The half of VAT tax would be used for building the city and the other half would be issued for services of the country such as garbage collection. The further public infrastructure of Bitcoin may cost around 300,000 bitcoins.

Mining of Crypto

The Cryptoheaven El-Salvador President makes an announcement about creating a Bitcoin city using crypto for projecting the fund, The Nayib Bukele also said that the city will be circular to represent a large crypto coin which will be built in the southeastern region of La Union as an advantage the city will be benefited with Conchagua volcano’s geothermal energy to power Bitcoin mining.

Bitcoin and other crypto mining can be done using sophisticated computers to solve complex mathematical problems, which takes huge amounts of energy and costs high as well.

Historical Events And Announcements

2021

03-12-2021: EL-Salvador is planning to be the crypto capital of the world by creating the first real-world CRYPTO CASINO in the country. 

21-11-2021: Ifinex announcement for launching a security platform of Bitcoin, signs an agreement in collaboration with El-Salvador government to create digital assets and security regulatory framework.

07-10-2021: An alliance formed by Tech Innovators to power up Bitcoin adoption and deliver Web3 financial services in El-Salvador. API3 is pleased to announce the BItcoin Alliance, with Banco Hipotecario, TESOBE, Qredo and Sovryn to support EL-Salvador Bitcoin adoption.

02-09-2021: El- Salvador signs a cooperation agreement  with a leading Latin American asset tokenization and Blockchain financial infrastructure company Koibanx, to develop the Government’s Blockchain infrastructure on Algorand.

09-06-2021: The El-Salvador Congress passes President Nayib Bukele’s proposal to adopt Bitcoin as legal tender, by this El Salvador became the first country in the world to adopt Bitcoin as legal tender.

Conclusion 

The crypto “Invest here and make all the money you want,” Bukele said the El-Salvador is stepping towards the aim of becoming the world’s largest crypto hub by adopting Bitcoin and using crypto for all the transactions in the country similar to other payment concepts with the measure as a way to boost economic development and jobs.

Even though the president’s Bitcoin love is questioned by few Salvadorians, the country’s Bitcoin trust is in the millions of profit ratio after adopting BItcoin as legal tender in fact citizens had more BItcoin wallets than conventional bank accounts just within a month, Bitcoin profit resulted in a positive educational move by building 20 new schools in the country. 

FAQ

Is Cryptocurrency legal in El-Salvador?

El Salvador is the first country to allow customers to use crypto in all transactions. The user can make any payment through the Bitcoin wallet app.

What Can I Buy with Bitcoin in El-Salvador?

Bitcoin is adopted as a legal tender in El-Salvador hence we can use it for all day to day transactions.

What is the tax impact of Crypto on El-Salvador ?

EL-Salvador’s Bitcoin city is free from income, property, and capital gains taxes. Only the 10% of value-added tax affects the construction of the city and various services. 

Are exchanges regulated in El-Salvador?

Bitcoin service providers fall under the ‘Bitcoin Law‘ of the country, providing Bitcoin-related services, and are used as custodians, crypto exchanges, and payment processors or wallets. 

What is the Status of Cryptocurrency Mining in El-Salvador?

El-Salavdor just started mining Bitcoin using the energy from volcanoes. Mining projects are still under testing and installing phase.



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