President of El Salvador Says He’s Submitting Bill to Make Bitcoin Legal Tender; Zap’s Jack Mallers

Zap’s Jack Mallers Announcement

During the just-concluded Bitcoin 2021 conference in Miami, Zap’s Jack Mallers announced El Salvador is developing a bill to recognize bitcoin (BTC, -1.34%) as legal tender. According to President Nayib Bukele in a videotaped announcement shown Saturday, he will submit the bill next week.

Zap’s Jack Mallers said his company is working with Bukele to implement a plan. 

“As of now, El Salvador is set to be the first bitcoin country,” Mallers said, “and the first country to make bitcoin legal tender and treat it as a world currency and have bitcoin on their reserves.”

The announcement shows the bill must be reviewed by the country’s legislative assembly. However, with the populist Bukele’s upstart political party in firm control of that body, its approval seemed all but assured Saturday afternoon. 

If the bill is approved El Salvador would likely be the first nation to adopt a bitcoin standard.

What experts are saying!

From the time of the announcement, speculations had it that Salvadorans will soon buy their groceries with Bitcoin.

Bukele through a tweet said the bill would also make it cheaper and quicker for migrants to send money back home to El Salvador. 

He explained that only 30% of Salvadorans have bank accounts, making remittances in fiat currencies unnecessarily expensive. A big deal, considering remittances comprise 21% of the country’s GDP.

While many think declaring bitcoin a legal tender will lessen the remittance burden, George Selgin, who directs Cato’s Center for Monetary and Financial Alternatives said it has nothing to do with remittances or payments. He suggests that all the bill would do is allow Salvadorans to use Bitcoin to settle debts contracted in the currency. “Not earth-shattering in itself,” he said.

The change may also allow banks to transact in Bitcoin, accept deposits and hand out loans in the cryptocurrency, he said.

Selgin said; “But the new law wouldn’t change how Bitcoin is used in ordinary exchange, except to the extent that it results in a different tax treatment of such transactions.”