El Salvador’s President Nayib Bukele recently announced his intention to make Bitcoin legal tender in that country. Experts from Sovryn, Ledgermatic and ARK36 shared their vision with Cointelegraph in Spanish.
Edan Yago is co-founder of Sovryn, a protocol for DeFi on Bitcoin, commenting: “Ten years ago, early adopters of Bitcoin, like myself, made outrageous claims that Bitcoin would become the world’s reserve currency. Sometimes we even wondered if we had lost our minds. But here we are and it is happening.
– Bitcoin is too volatile to be used as a currency for daily transactions. However, the technology of creating stablecoins with bitcoin support enables it to play the role of currency for people all over the world, ”added Yago.
He later pointed out that 70% of El Salvador’s residents do not have a bank account. â € œYou will never need it thanks to Bitcoin. El Salvador will bypass our increasingly corrupt monetary and financial system and be one of the first to benefit from a more transparent and secure system, ”he noted
On the flip side, Luke Sully, CEO of treasury technology company Ledgermatic, said: “President Nayib Bukele, 39, announced his intention at a Bitcoin conference in Miami this weekend that Bitcoin would be legal tender in El Salvador, he will present it in Congress this week, but with his party controlling 56/84 seats there, it will likely happen.
He believes the country’s GDP will grow 25% with just one percent of BTC’s market cap moving across the country. He also believes remittances will increase in the country – and their costs will decrease. Remittances that reach the country account for 20 percent of GDP. Using peer-to-peer currency through smartphones would eliminate commissions from intermediaries moving money from overseas into the country, ”explained Sully.
Implications and Questions
The tax implications are probably the most important. As legal tender, there would be no cap on bitcoins used or sold domestically.
Will El Salvador become a BTC to USD conversion center? That is one of the questions that arises from all of this.
Bukele’s decision also appears to be a direct reaction to the Federal Reserve’s aggressive spike in USD supply over the past 12 months, which is reducing the dollar’s purchasing power for a country that is still loosely pegged to the USD
One could say that the President of El Salvador sees the volatility of BTC as a lower risk than his current macroeconomic situation.
It should be noted that the medium-term regional implications as a financial center are also important.
The CEO of the cryptocurrency / digital asset hedge fund ARK36, Ulrik K. Lykke, he also referred to the statements made by the President of El Salvador, Nayib Bukele. In this context, Lykke is stated, “As a digital asset mutual fund, ARK36 is very interested in this development and its implications for Bitcoin investors around the world.
An important consequence of this move would be that financial regulators and tax authorities would have to redefine their perception of Bitcoin as there are now strong arguments in favor of its classification as a foreign currency. This, in turn, would likely result in how the profits from investing in Bitcoin would be taxed. For example, in some jurisdictions, capital gains tax would no longer apply on profits from an investment in Bitcoin. This development can potentially encourage more investors to diversify their investment portfolios by using Bitcoinâ ????
Then he added: The fact that El Salvador will recognize Bitcoin as legal tender also raises the question of whether taxes are also levied in BTC. If that were the case, we could reasonably assume that El Salvador would also put some of its national reserves directly in BTCâ ???? would hold.
Of course, it’s difficult to understand all of the implications of the El Salvadorian government’s decision to make Bitcoin legal tender.
“Such a bold move by a small nation, however, begs the question of whether this is a one-off situation or a looming domino effect,” concluded Lykke.
After the CEO of TKCoin.org and ideologist of EDUCoin, Santiago Cassina, knew Bukele’s statements, he announced from Argentina that he was providing the Salvadorans with an educational cryptocurrency to help them understand the crypto world, especially what Bitcoin is.
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