There is a great number of issues debated today following the major news that El Salvador recognized the world's number one cryptocurrency, bitcoin (BTC), as legal tender. This may bring some important changes when it comes to how bitcoin is treated on the legal stage globally. However, in what manner and to what extent is not exactly clear yet.
source: https://cryptonews.com/news/el-salvador-brings-new-global-puzzle-what-is-bitcoin-how-to-10622.htm
As reported, the Legislative Assembly of El Salvador passed the Bitcoin law today. Also, the 90-day countdown to promulgation has already begun, meaning that, in September, BTC will be recognized as a satisfactory payment for any monetary debt.
The new law also allows prices to be expressed in BTC and taxes to be paid in it, while exchanges in BTC will not be subject to capital gains tax.According to him, if El Salvador would declare that their legal tender is BTC only, then it would set an argument that BTC elsewhere is not subject to capital gains tax also.
- An experimental stunt
Governments and central banks around the world will be watching the El Salvador experiment to see if Bitcoin becomes part of daily life for payments, remittance and a reserve asset for banks and corporations in the country," Ross Middleton, Chief Financial Officer of DeversiFi, a Layer 2 decentralized exchange (DEX) and decentralized finance (DeFi) trading platform, said.
- An experimental stunt
However, per Howlett, El Salvador’s model can’t simply be copy-pasted, as every country would legislate in their own way, according to their formal procedures, but “as the El Salvador model proves to be a success, other countries will follow.”
He estimates that, most likely, it will be countries that "have the demographic of a third world country" and BTC adoption "could generate wealth that is unimaginable for them and bring some relief."
Howlett opined that BTC might help a country in case of hyperinflation.
“By adopting BTC as legal tender, a ‘currency’ that is decentralized, they avoid hyperinflation and it gives them an amazing opportunity to prosper as a country and a government,” he said.