El Salvador may be on the path to becoming the first country to adopt cryptocurrency as legal tender after a recent push by the country's president.
President Nayib Bukele announced on Saturday that he would send a bill to Congress in the coming week that would begin implementing Bitcoin as a legal tender. According to Bukele, the inclusion of Bitcoin as a tender would not only create jobs but spur economic activity as well.
A considerable amount of El Salvador's economic activity is provided through remittances; money sent back to families from relatives working abroad. While El Salvador uses the U.S. Dollar
Aiding in Bukele's effort is the firm Strike, which maintains a digital wallet for storing cryptocurrency. According to Strike founder and CEO Jack Mallers, the integration of Bitcoin into the El Salvadoran economy could be "transformative."
"Holding bitcoin provides a way to protect developing economies from potential shocks of fiat currency inflation. Additionally, adopting a natively digital currency as legal tender provides El Salvador the most secure, efficient, and globally integrated open payments network in the world," Mallers said at a convention.
Critics, however, are worrying that Bukele may not be fully considering the implications of such a move. In addition to possibly disrupting ongoing discussions with the International Monetary Fund, the adoption could pose issues for which the government may not have solutions, such as effectively collecting taxes on any held cryptocurrencies. New infrastructure will likely have to be built as well to facilitate transactions between El Salvadorans in rural regions of the country.