El Salvador made a major splash in the final hours of the Bitcoin 2021 conference in Miami on Saturday afternoon.
In a pre-recorded video, El Salvador President Nayib Bukele announced that he will send a bill to the country's congress to recognize Bitcoin as legal tender. Loud applause from the crowd in Miami drowned out the rest of his remarks.
The announcement did not immediately boost the price of Bitcoin (BTC), which is down 6% over the past 24 hours, after Elon Musk on Thursday evening tweeted out a meme about his breakup with Bitcoin.
Bukele's video played during a talk by Jack Mallers, founder of Strike, a digital wallet built on the Lightning Network.
Mallers said on stage that he had lived in El Salvador for three months and discovered that some 70% of the population there does not have a bank account, and 20% of the country's GDP comes from remittances sent by migrants to family members. Strike launched in El Salvador in March, and Mallers said the app has been "onboarding" 20,000 El Salvadorans per day. He framed Bukele's forthcoming legislation as the next step in a partnership between Strike, which will open an office in El Salvador, and the local government there.
Mallers called the announcement a "shot heard 'round the world for Bitcoin." VC and Bitcoin flag-waver Tim Draper praised it as a "brilliant government move" and said "entrepreneurs and investors will be on the next flights to El Salvador." Caitlin Long of Avanti Bank & Trust in Wyoming called it a "historic day in Bitcoin" but also predicted a "knockdown fight" to get approval because recognizing Bitcoin as legal tender would likely give it the same status as foreign currencies by banks, a level of legitimacy for the top cryptocurrency that many do not want to see granted. (Bukele does have a majority of votes in El Salvador's congress.)
El Salvador is one of a handful of non-U.S. nations that uses the U.S. dollar as its official currency. But tensions have risen recently between the Central American nation and the United States over El Salvador's recent shakeup of its justice system. In May, the U.S. Agency for International Development (USAID) said it will redirect funding away from El Salvador’s state institutions (including its Attorney General's office) and give it instead to local human rights organizations.
If Bukele's Bitcoin bill goes through without a hitch, El Salvador will be the first nation to officially recognize Bitcoin as legal tender.