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Author: Admin | 2025-04-27
On June 9th El Salvador passed an unprecedented bill, where 62 out of 84 congressional voters decided to make Bitcoin the country’s legal tender. It’s the first case in history of Bitcoin being used as a territory’s official currency, a feat that will bring long-lasting ramifications. In this article, we cover the different definitions of legal tender, how it benefits El Salvador, the local/worldwide implications of this move and its potential ramifications on crypto as its biggest case study yet. What is legal tender?A legal tender is a form of payment that governments must accept for any debt settlement such as taxes, public or private charges and business dues. However, an asset being labelled as legal tender doesn’t necessarily mean that it can be exchanged for local goods and services in everyday life like coins and banknotes. That factor depends on each country’s understanding of their legal tender(s), but generally legal tender refers to a medium of payment recognized by a legal system to be valid for meeting a financial obligation. The US legal tender definition applies to any currency issued by the Fed Reserve, but no seller is required to accept cash dollars as payment. Same for Australia; coins and banknotes are legal tenders but business owners are not obligated to accept them in trade. As for El Salvador, the country abandoned its own national currency for the US dollar in 2001, before recently adding Bitcoin. Both debt settlement and commercial services must accept legal tender transactions, meaning Salvadoran merchants must comply with Bitcoin as a form of payment. Advantages of Bitcoin for El Salvador By adopting Bitcoin as legal tender, President Nayib Bukele seeks to provide El Salvador with investment incentives, job opportunities and develop further financial inclusion. El Salvador is one of the smallest economies in Latin
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