The price of the largest cryptocurrency by market cap dropped on Tuesday after breaking through $52,000 one day earlier, reaching its highest point since May. On Tuesday, El Salvador officially adopted Bitcoin as legal tender, and the country’s decision affected the price of Bitcoin. The country from Central America became the first country to accept the most popular cryptocurrency as legal tender. It will work alongside the U.S. dollar.
It fell as much as 16% on Tuesday morning. The major cryptocurrency was last down about 9.5% and trading at $46,892.04.
Crypto-related stocks MicroStrategy as well as Coinbase also about 9% and 4%, respectively. Also, Coinbase users were experiencing delayed or canceled transactions at “elevated rates” in the morning. Other major crypto exchanges Kraken and Gemini were also investigating delays and performance issues.
El Salvador temporarily disabled Chivo, its government-run Bitcoin wallet on early Tuesday. It disabled Chivo to increase the capacity of the servers, which were hindering new users from installing it according to President Nayib Bukele.
Notably, the country launched a wallet app that people can sign up for with a national ID in order to transact using BTC. People will receive $30 worth of BTC when they sign up in a push to speed up adoption.
Last month, the Congress of El Salvador passed a law to create a $150 million fund. This fund will help to facilitate conversions from BTC to U.S. dollars.
Companies in El Salvador will have to accept Bitcoin for goods and services as part of the new law. Merchants who are not technologically able to accept BTC will be exempt. The country’s government installed Bitcoin 200 ATMs across the country. The government also bought roughly $20.9 million worth of BTC on Monday.
The country’s decision to adopt BTC as legal tender raised concerns among ordinary citizens. Many people disagreed with the administration’s decision to adopt BTC and many were also unsure of how to use the cryptocurrency.
People who support El Salvador’s move say that it indicates a growing acceptance of BTC and other countries could follow. The government hopes it will boost financial inclusion in a country where around 70% of citizens don’t have access to traditional financial services.
El Salvador is not the only country from Central America that is willing to embrace cryptocurrencies. This week, Panamanian politician Gabriel Silva introduced the “crypto law”. The purpose of “crypto law” is to make Panama a country compatible with the blockchain, crypto assets, and the internet.
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