Last year, El Salvador became the first country to legalize Bitcoin. The central American country made Bitcoin a legal tender in addition to the US dollar and required businesses to accept it as payment for transactions.
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Since then, many other countries and cities worldwide have been working on suitable legislation for cryptocurrencies. Just last month, Colorado said it would begin accepting cryptocurrencies for tax payments this summer. Rio de Janeiro also said it would begin accepting cryptocurrencies for tax purposes in 2023. However, no other country has made the same bold move as El Salvador until now.
According to reports the Central African Republic has become the second country to approve Bitcoin as an official currency. On April 28, a spokesperson for the Central African Republic told reporters about the new development. They also stated that the government believes making Bitcoin an official currency would improve the conditions of the citizens.
Despite its rich gold and diamond deposits the Central African Republic remains one of the poorest countries in the world with a GDP of $2.3 billion in 2020. The World Bank reports that more than 70% of the country’s 4.7 million population lies below the international poverty line. The country has also been played by unrest for years. The government seems to have chosen Bitcoin to better the lot of the citizens and usher in a new era for all. If the venture does succeed, it would be quite a feat for the world’s largest cryptocurrency.
In addition to other crypto-friendly Kenya, South Africa, and Botswana will be better incentivized to make similar legislation. Apart from the Central African Republic, another country is closely following the path of El Salvador. Lawmakers in Panama, another Central American country, have approved a bill regulating the use of Bitcoin and eight other cryptocurrencies. If the president signs the bill into law, Panama will start accepting Bitcoin and eight other cryptocurrencies for taxes and private transactions. On Twitter, Panamanian lawmaker Gabriel Silva said this about the bill:
According to a copy of the draft bill that Silva shared on Twitter, the nine cryptocurrencies are Bitcoin, Ethereum, XRP, Litecoin, XDC, Elrond, Stellar, IOTA, and Algorand.
If president Laurentino Cortizo signs the bill, it will permit citizens, banks, and legal entities to use the nine crypto assets as a means of payment. All nine crypto assets would be acceptable for both civil and commercial payment purposes in Panama.
Panama will also be launching an official digital wallet like El Salvador’s Chivo app to facilitate secured cryptocurrency transactions. Silva said Panama will use blockchain technology to create a decentralized platform that enables cryptocurrency transactions to be faster, more efficient, and transparent.
Although Panama is following El Salvador’s path, it does not really give the stipulated crypto assets a legal tender status as businesses will not be mandated to accept cryptocurrencies for transactions. Still, there are many important factors to note about the new development.
One is that Panama has a reputation for being a tax haven. It is widely admired for its simple and progressive tax rates for citizens and foreigners. This is reflected in the bill, which states that there would be no capital gains tax on Bitcoin investments.
Panama is also one of the most developed countries in Central and South America, with a GDP of more than $60 billion. This is the second Central American country to show such an affinity for Bitcoin, all within the space of a few months. If the bill passes, other Central American countries will certainly come up with similar legislation to not be outdone by El Salvador and Panama. The lawmakers have done their part by unanimously voting to pass the bill. All that is left is for the president to sign the bill. Then we can all look forward to the massive ripple effect that will follow. What do you think about these new developments in crypto adoption?
[This article is a transcription of a video made by Savvy Finance]
Original video: https://youtu.be/KbkBDUQAekE ]