El Salvador’s Bitcoin Law Update: What You Need to Know
El Salvador’s Bitcoin Law changes have caused a lot of confusion around whether Bitcoin is still legal tender in the country.
Samson Mow, CEO of JAN3, a Bitcoin focused tech company, took to social media to break it down.
| Broker | Review | Regulators | Min Deposit | Website | |
|---|---|---|---|---|---|
| 🥇 |  | Read Review | FCA, CySEC, ASIC, MAS, FSA, EFSA, DFSA, CFTC | USD 100 | Visit Broker |
| 🥈 |  | Read Review | FSCA, FSC, ASIC, CySEC, DFSA | USD 5 | Visit Broker |
| 🥉 |  | Read Review | CySEC, MISA, FSCA | USD 25 | Visit Broker |
| 4 |  | Read Review | ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB | USD 200 | Visit Broker |
| 5 |  | Read Review | ASIC, FCA, CySEC, SCB | USD 100 | Visit Broker |
| 6 |  | Read Review | FCA, FSCA, FSC, CMA | USD 200 | Visit Broker |
| 7 |  | Read Review | BVI FSC | USD 1 | Visit Broker |
| 8 |  | Read Review | CBCS, CySEC, FCA, FSA, FSC, FSCA, CMA | USD 10 | Visit Broker |
| 9 |  | Read Review | ASIC, CySEC, FSCA, CMA | USD 100 | Visit Broker |
| 10 |  | Read Review | IFSC, FSCA, ASIC, CySEC | USD 1 | Visit Broker |
Bitcoin is still legal tender but no longer a currency. This means Bitcoin transactions are voluntary not mandatory raising questions about the future of BTC adoption in El Salvador.
Key Takeaways:
- Bitcoin remains legal tender in El Salvador but is no longer classified as a currency.
- Businesses are no longer required to accept BTC; government payments in BTC are discontinued.
- El Salvador aligns with IMF requirements, but Bitcoin adoption may slow.
Bitcoin: Legal Tender, But Not Currency?
The latest changes to the Bitcoin Law redefine Bitcoin’s status. Before Bitcoin was considered both a currency and legal tender, meaning businesses had to accept it. Now, while it’s still legal tender it’s no longer a currency.
Samson Mow explains:
“Bitcoin both is and isn’t legal tender.”
The distinction is crucial because, under the new rules:
- Bitcoin transactions are still tax exempt, no capital gains tax.
- Businesses can choose to accept BTC, no longer required.
- Government is no longer required to facilitate BTC transactions, so Chivo Wallet might be phased out.
It aligns with IMF requirements so El Salvador can comply with global financial agreements and keep Bitcoin as legal tender.
Major Changes in the Bitcoin Law
Samson Mow’s breakdown of the law changes highlights the main differences for Bitcoin in government payments, taxation and business acceptance:
Article 3: Bitcoin for Payments
- Before you could price goods directly in BTC.
- Now you must convert fiat price to BTC before processing payments.
- Customers cannot price goods in Satoshis (sats), they must be listed in fiat.
Article 4: Government Payments in BTC
- Taxes can no longer be paid in Bitcoin.
- Government will no longer accept BTC for company registrations, passport fees or future citizenship-by-investment programs.
- The $12 airport entry fee must be paid in fiat.
Article 8: State’s Role in Bitcoin Transactions
- The government is no longer responsible for facilitating BTC transactions.
- This paves the way for the potential removal of Chivo Wallet, the state-run BTC payment platform.
These changes reduce government involvement in Bitcoin transactions, leaving adoption in the hands of businesses and individuals.
What Does This Mean for Bitcoin Adoption?
El Salvador was the first country in the world to make Bitcoin legal tender but these changes weaken its position in the global crypto space. Samson Mow said:
“The weakening of the Bitcoin Law makes El Salvador a bit less unique.”
While El Salvador still recognizes Bitcoin as legal tender, the new law removes the obligation for businesses and the state to use it. This will slow down BTC adoption for daily transactions but allows El Salvador to comply with IMF and keep its Bitcoin reserves.
Meanwhile other jurisdictions are Bitcoin friendly:
- Bhutan holds Bitcoin in its national reserves.
- Próspera (Honduras) still treats Bitcoin as legal tender.
- Hong Kong, Dubai, Singapore and Switzerland (Lugano) have no capital gains tax on Bitcoin.
- Madeira and Czech Republic have tax exemption on BTC after certain holding periods.
El Salvador’s Bitcoin experiment continues but now it faces competition from other regions positioning themselves as crypto friendly financial hubs.
ABOUT THE AUTHOR
See More
Add 3442
Related Posts
Add 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals
Top Broker