Canada Adopts International Crypto Tax Reporting Standard
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El Salvador, the nation that has led the charge of Bitcoin adoption as legal tender, is seeing more citizens turn to the cryptocurrency as trade volume increases. Adoption in the Central American country is gaining as Salvadorans are continuing to exchange their US dollar fiat savings to buy Bitcoin instead.
According to President Nayib Bukele, who instated Bitcoin as legal tender earlier this year, tweeted that citizens are making use of the country’s in-house wallet service, saying:
2 new Chivo Facts:
1. People are inserting way more USD (to buy #BTC) than what they are withdrawing from the Chivo ATMs (any media outlet can independently confirm this by visiting the ATMs).
2. Today, we received 24,076 remittances, adding up to $3,069,761.05 (in one day).
— Nayib Bukele 🇸🇻 (@nayibbukele) October 16, 2021
As more dollar-to-Bitcoin conversions take place in the region, there is a shift towards the sentiment of Bitcoin from those in the country. Initially, many citizens in El Salvador were in opposition to the government passing the Bitcoin Law out of concerns of the country’s fiat strength and national economy, However, with encouragement from the government with subsidies for using Bitcoin, there has been a greater positive stance on using the token.
According to Bukele, Salvadorans who use Bitcoin get an exemption on fuel:
“The state company Chivo negotiated with the largest gas station companies in our country, so that starting tomorrow, their stations will sell each gallon of fuel $ 0.20 cheaper, with Chivo wallet.”
In addition to fuel subsidies, Salvadorans making a profit on Bitcoin trading with not be taxed on the income. Javier Argueta, the Bukele’s legal advisor stated:
“If a person has assets in Bitcoin and makes high profits, there will be no tax. This is done obviously to encourage foreign investment.” Argueta also added that the county will not impose taxes on “either the capital increase or the income.”
According to the Salvadoran Foundation for Economic and Social Development, within one month of the launch, 12% of consumers have used Bitcoin in the country.
However, despite the encouragement towards Bitcoin adoption, merchant adoption in the country is still slow. According to a survey by the Salvadoran Foundation for Economic and Social Development, a massive 93% of Salvadoran businesses reported receiving no payments in Bitcoin.
According to local business owner Alexander Diaz, many people wanted to test out Bitcoin payments and make use of a launch bonus that was offered by the government for downloading the Chivo wallet. According to Diaz, 20% of customers now use Bitcoin to make payments. He stated:
“Most of the people who had a bonus wanted to test how it could be spent, so several clients made payments to us with bitcoin. Chivo has benefited small entrepreneurs because it makes the payment method easier for customers.”
How can Salvadorans access Bitcoin?
The nation-issued Chivo Bitcoin wallet is popular among Salvadorans. Since the launch of the wallet, three million people have downloaded the Chivo wallet – making up a whopping 46% of the population. To put the economic significance into perspective, only 29% of Salvadorans had traditional bank accounts in 2017.
The Chivo wallet isn’t the only way for citizens to buy Bitcoin, however. Any wallet that functions using the Lightning Network can be used to transact or make payments with merchants in the country too.
Moreover, there has been a massive uptake of Bitcoin ATMs in El Salvador. Since the Bitcoin Law was passed, El Salvador has rolled out more than 200 ATMs across the country, overtaking Spain and Austria in Bitcoin ATM-count. Now, El Salvador boasts the third-largest network of cryptocurrency ATMs; only after the United States and Canada.