El Salvador has become the first country in the world to
formally adopt bitcoin as legal tender after Congress approved President Nayib
Bukele's proposal to embrace the cryptocurrency. With 62 out of 84 possible
votes, a majority of lawmakers voted in favor of the initiative to create a law
that will formally adopt bitcoin, despite concern about the potential impact on
El Salvador's program with the International Monetary Fund.
El Salvador’s central bank President Douglas Rodriguez said in an interview with state TV on Tuesday that Bitcoin is already used in the country and “it’s not something people need to be afraid of,” while adding it won’t replace the U.S. dollar. Bitcoin has roughly halved from a mid-April record of almost $65,000, hurt in part by billionaire Elon Musk’s criticism of the amount of energy needed by the servers underpinning it. Harsher regulatory scrutiny in places such as China has also soured sentiment, and the idea that more mainstream investors will warm to it has taken a knock. But the Bitcoin faithful say these are temporary setbacks and that the virtual currency’s role will expand. Bitcoin climbed 2.5% to about $34,500 as of 8:05 a.m. in London on Wednesday, reversing earlier losses. The wider Bloomberg Galaxy Crypto Index increased about 3%.
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