El Salvador’s Bitcoin transactions during May soared by over four times year-to-year. However, fiat payments still represent the broad majority of transactions in the Latin American nation, a report by Reuters states.
El Salvador became the globe’s first country to announce and pass regulation earlier this month that makes Bitcoin legal tender. This means that the crypto coin can be used to pay federal taxes, be accepted by companies, and not be contingent upon capital gains taxes.
According to the report, the monthly BTC remittances of under $1,000 totaled $1.7 million last month compared to $424,000 the previous year. Transfers of this size are typically used as a proxy to establish the transfer numbers from Salvadorian ex-pats working outside the country. In 2019, almost $6 billion – or one-fifth of El Salvador’s GDP – comprised remittances, which showcases one of the highest ratios in the world, as per World Bank.
Bitcoin as a Legal Tender
President Nayib Bukele said that making the crypto coin legal tender will help decrease the cost of making such transactions for the country’s 6.5 million citizens and will help tackle El Salvador’s substantial unbanked population. Reuters has also reported that the politician has asked state-owned energy company LaGeo, which leverages the nation’s active volcanos to create geothermal energy, to make their capabilities available to crypto mining activities.
Numerous organizations shared their concerns over El Salvador’s move to make the digital coin legal tender, including the International Monetary Fund (IMF), which cautioned the country of economic and legal issues last week. An official with the Bank of International Settlement (BIS) also called the bitcoin regulation in El Salvador an ‘interesting experiment.’ Still, it said it did not alter the bank’s approach to digital coins whatsoever. The European Central Bank (ECB) president, Christine Lagarde, similarly said the bank’s policy would not be affected by El Salvador’s bitcoin regulation.