El Salvador bought $20.9 million U.S. worth of Bitcoin a day before it formally adopts the cryptocurrency as legal tender.
In a series of Tweets, El Salvador President Nayib Bukele revealed that the country had purchased 400 Bitcoin, the first step in a push to add the digital currency to the government’s balance sheet.
The Twitter posts came hours before El Salvador’s Bitcoin law, which was passed in June of this year, took effect. El Salvador is the first country to accept Bitcoin as a legal currency, which will work alongside the U.S. dollar and be held in reserve.
Proponents and critics of cryptocurrencies around the world will be watching to see how El Salvador’s experiment with Bitcoin plays out.
Nearly 70% of Salvadorans surveyed by the Central American University disagreed with the administration’s decision to adopt Bitcoin as legal tender. Many people said they are unsure of how to use the digital currency.
Supporters of El Salvador’s move say that it indicates growing acceptance of Bitcoin and that other countries could follow its lead. The Salvadorian government hopes Bitcoin will boost financial inclusion in a country where around 70% of citizens do not have access to traditional financial services.
The legislation allows prices to be displayed in Bitcoin, tax contributions to be paid with the digital currency, and exchanges in Bitcoin will not be subject to capital gains taxes.
El Salvador launched a wallet app called “Chivo” that citizens can sign up for with a national ID to transact using Bitcoin. Users will receive $30 U.S. worth of Bitcoin when they sign up in a push to speed up adoption of the cryptocurrency.
Last Tuesday, the Congress in El Salvador passed a law to create a $150 million U.S. fund to help facilitate conversions from Bitcoin to U.S. dollars.
