The adoption of the Bitcoin Standard by nation-states has begun. El Salvador will become the first country to declare BTC legal tender. The announcement was made recently; the crypto space and its industry are still processing its impact.
Although it is a relatively small country, El Salvador could unleash an effect similar to the one it had when MicroStrategy included BTC in its treasury. At the time, a domino effect triggered one of the longest periods of BTC adoption by public companies.
As Nayib Bukele, Head of State of El Salvador said through his Twitter account, Bitcoin has a market capitalization of $ 680 billion. If 1% of this figure is invested in this country, according to Bukele’s calculations, its GDP could grow by 25%.
After a violent civil war, El Salvador adopted the dollar as its official currency. Many went into exile or emigrated to other countries with better economies. This had two consequences for the country: it is supported by the stability of the US dollar, with concern about the increase in inflation in this currency, it seems logical that the country should promote an alternative.
As a second consequence, many people receive remittances. Around $ 6 billion is paid to third parties to process remittances. Bukele claims that by adopting BTC, 1 million low-income families will benefit and increase their income “by the equivalent of billions of dollars every year.” Bukele saying:
On the other hand, Bitcoin will have 10 million potential new users and the fastest growing way to transfer $ 6 billion a year in remittances.
Other data provided by the Head of State indicates that around 70% of the country’s population is unbanked. However, many have access to a smartphone. Bitcoin will be a tool to create financial inclusion and help economic growth. People will be able to save, invest, access credit and their transactions will be insured by the BTC network.
One small step for Bitcoin, one giant step …
Many countries around the world share these conditions. Many wondered how long it will take for other Heads of State to realize the benefits of the Bitcoin Standard. In the United States alone, local government officials, senators, congressmen and women, and other government officials have welcomed the announcement.
Caitlin Long, a Wyoming state-appointed member of the Blockchain Select Committee and a 22-year Wall Street veteran, believes El Salvador’s decision could open a back door for banks in the U.S. to handle Bitcoin
1 / TALK ABOUT A HISTORICAL DAY in #bitcoin: #The Savior President publicly announced his support for legislation to make #BTC legal tender. * IF * it becomes law, it will have many side effects. Open up yourselves cause a big fight on this will probably come thoughhttps://t.co/BrrNxaLzpZ
– Caitlin Long 🔑 (@CaitlinLong_) June 6, 2021
Long clarified that “legal tender” is a commercial law term, it means that citizens can offer an asset to pay an obligation and in exchange for a property. She added that:
Legal tender is key to commercial law, which is THE fundamental layer of any legal system (…). Bitcoin is treated as an “indefinite intangible”, which means lower cost or market, but if it is a foreign currency, its market value increases and decreases.
This means that BTC can be added to corporate treasuries without a business having to face “punitive accounting.” BTC could be treated like any other foreign currency. Hence, more companies could find benefits from adopting BTC. Long added that the cryptocurrency could be treated as money and explained:
it means that Bitcoin would gain a special status in the banking systems globally. Banks would probably treat it like any other foreign currency. #Bitcoin * CAN * get favorable backdoor treatment under bank capital requirements.
US Business Law Angle If El Salvador really goes ahead and recognizes Bitcoin as legal tender … Bitcoin then becomes “money” according to UCC § 1-201 …. 🧐 https://t.co/CQLZhXt2XE
– Andrea Tosato (@Andrea_Tosato) June 5, 2021
At the time of writing, BTC’s price action remains choppy and is trading at $ 36,140. The cryptocurrency has been moving in the middle area of its current levels. There is a lot of uncertainty for the next few weeks, many expect more downsides, but the impact of the recent announcements could materialize in the short term and add fuel to restart the rally.