El Salvador Passes Historic Law Declaring Bitcoin Legal Tender

The Congress of El Salvador has passed the Bitcoin Legal Tender bill with 62 out of 84 voting in favor, said Nayib Bukele, the president of El Salvador.

The bill is translated below in full with it stating the bill “is to regulate bitcoin as legal tender,” detailing “all prices can be expressed in Bitcoin” and “all tax contributions can be paid in bitcoin,” as well as:

“Every economic agent must accept bitcoin as a form of payment when it is offered to him by whoever acquires a good or a service.”

The above has an exception in Article 12 that excludes individuals or businesses from accepting bitcoin if they “do not have access to the technologies that allow execution of bitcoin transactions.”

The state of El Salvador through the development bank of El Salvador will guarantee the “automatic and instantaneous convertibility from bitcoin to dollars.”

It will also “promote the necessary training and mechanisms so that the population can access bitcoin transactions.”

This all encapsulating law includes repayment of debts, including those prior to the law coming into effect, to be paid in bitcoin with Article 13 specifying:

“All obligations in money expressed in dollars, including those existing prior to the effective date of this law, may be paid in bitcoin.”

Finally this law maintains that “for accounting purposes, the dollar will be used as the reference currency.”

It isn’t thus quite a leap into the unknown, more an expansion of options, with a rough translation of this law stating in full:

“I. That according to Article. 102 of the Constitution of the Republic, the State is obliged to promote and protect private enterprise, generating the necessary conditions for it to grow national wealth in the benefit of the largest number of citizens.

II. That under Legislative Decree No. 201, published in Official Gazette number 241, Volume 349, dated December 22, 2000, the United States of America dollar was adopted as legal tender.

III. That approximately seventy percent of the population does not have access to traditional financial services.

IV. That it is the obligation of the state to facilitate the financial inclusion of its citizens in order to better guarantee their rights.

V. That in order to promote the economic growth of the country, it is necessary to authorize the circulation of a digital currency whose value obeys exclusively free market criteria, in order to increase national wealth for the benefit of the greatest number of inhabitants.

VI. That according to the previous considerations, it is essential to issue the basic rules that regulate the legal course of bitcoin.

Article 1. The purpose of this law is to regulate bitcoin as legal tender, unrestricted with liberating power, unlimited in any transaction and to any title that public or private natural or legal persons want to carry out.

What is mentioned in the previous paragraph is without prejudice to the application of the Monetary Integration Law.

Article 2. The exchange rate between bitcoin and the dollar of the United States of America, hereinafter dollar, will be freely established by the market.

Article 3. All prices can be expressed in Bitcoin.

Article 4. All tax contributions can be paid in bitcoin.

Article 5. Exchanges in bitcoin will not be subject to capital gains tax like any legal tender.

Article 6. For accounting purposes, the dollar will be used as the reference currency.

Article 7. Every economic agent must accept bitcoin as a form of payment when it is offered to him by whoever acquires a good or a service.

Article 8. Without prejudice to the actions of the private sector, the State will provide alternatives that allow the user to carry out transactions in bitcoin, as well as to have automatic and instantaneous convertibility from bitcoin to dollar if they wish. The State will promote the necessary training and mechanisms so that the population can access bitcoin transactions.

Article 9. The limitations and operation of the alternatives of automatic and instantaneous conversion from bitcoin to dollar provided by the State will be specified in the Refunding issued for this purpose.

Article 10. The executive body will create the necessary institutional structure for the purposes of applying this law.

FINAL AND TRANSITORY PROVISIONS

Article 11. The central reserve bank and the superintendency of the financial system shall issue the corresponding regulations within the period mentioned in article 16 of this law.

Article 12. Those who do not have access to technologies that facilitate bitcoin transactions are excluded from the obligation expressed in article 7 of this law. The State will promote the necessary training and mechanisms so that the population can access bitcoin transactions.

Article 13. All obligations in money expressed in dollars, including those existing prior to the effective date of this law, may be paid in bitcoin.

Article 14. Before the entry into force of this law, the State will guarantee, through the creation of the trust in the development bank of El Salvador (BANDESAL), the automatic and instantaneous convertibility to dollars of the alternatives provided by the State mentioned in the Article 8.

Article 15. This law will have a special character in its application with respect to other laws that regulate the matter, repealing any provision that contradicts it.

Article 16. This decree will enter into force ninety days after its publication in the Official Gazette.”