What people will do for money. This is headlined by countries.
El Salvador had their sights set on becoming a crypto capital for the world. It was one of the first countries to focus upon crypto-friendly regulations and laws.
In 2021, the country took the bold step of making Bitcoin legal tender. This really got the crypto world excited, since most through it would send the price skyrocketing. It is rather ironic that people were applauding Bitcoin being accepted by the rule of law and the power of government.
No matter, that is how things unfolded.
Fast forward a few years, and things change completely.
Source
El Salvador Changes Its Bitcoin Law
El Salvador found itself in hot water financially. This meant that it had to turn to the IMF for a loan.
The country amended the law which it has to submit to the IMF for approval. That was granted the other day, allowing more funds to be released.
So what does this mean?
Overall, it isn't a major change. The essence of this change is that the legal tender designation was basically wiped out. No longer can Bitcoin be used to pay taxes, something that tends to be a requirement for legal tender.
That might not be much of an issue since it is unlikely that many were paying in this manner.
Another change, which also alters the legal tender designation, is the fact that businesses do not have to accept Bitcoin for payment. They can choose to, making it voluntary. However, legal tender also means that companies accept it as payment for good, services, and debt repayment.
The Bitcoin Law changes related to the legal tender status highlight that merchants are no longer compelled to accept BTC, and it is no longer an option for tax payments, removing key aspects of its previous legal tender status. Going forward, BTC acceptance will be voluntary. Thus, under the reviewed Bitcoin Law, bitcoin is no longer classified as "currency" but remains a payment method exempt from capital gains tax.
The final change is the unwinding of public infrastructure. Essentially, the government is being forced to remove itself from Bitcoin.
The public sector activities related to bitcoin will be phased out to comply with the "confined" status the IMF required in December. Chivo Wallet, El Salvador’s central infrastructure for bitcoin transactions, will be unwound. Despite the issues and criticism around it, it was one of the main ways for average Salvadoreans to use BTC during these years.
Other Countries Joining The Party
El Salvador was a trailblazer in its purchase of Bitcoin as part of its reserve. For years, the country purchased 1 BTC a day.
The country is being pushed away from accumulating more. This could be covered if other countries, such as the United States, start to implement this process themselves.
CryptoAssets are going to enter the mainstream over the next couple years. While countries discuss the idea of accumulating Bitcoin, there are a lot of other aspects to focus upon.
The first, as I wrote a great deal about, are stablecoins. This is going to be an expansion of the US dollar reach.
Then we have real world assets, including discussions of tokenizing stocks. Once this happens, we are going to this industry get into multiple trillions.
El Salvador might have been a forerunner but others are about to join the party.
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I love the way you share some great new about things most times. Good one boss👍 El Salvador took a big risk, but money talks regardless. Cryptocurrency is still growing, and other countries will join in soon. I believe that..
Thank you for this news. I believe that this further change to the law brings the adoption of Bitcoin to a model that all nations in the world can truly rely on. If I understand correctly, this change was introduced to comply with an agreement with the International Monetary Fund. This should have granted the country a loan of 1.4 billion dollars for having reduced the official role of Bitcoin in the economy. In my opinion, this was another excellent move by El Salvador !WINE
Very annoying IMF is ruining everything and I think it's a blow to the crypto community.
The question that I am asking, will other countries abandon the idea of adopting Bitcoin as legal tender, or are there other models that can succeed?
Bitcoin is lousy legal tender. It fails as a medium of exchange. Too much price volatility.
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"For years, the country purchased 1 BTC a day." That is really a huge step they took
I am just trying to imagine how many BTC they will have acquired right now. I strongly believe they believed in the future