Five Countries on the Verge of Accepting Bitcoin as Legal Tender in 2022
El Salvador was all over the news the last September after becoming the first country to adopt Bitcoin formally as a legal tender. This move is historically significant and novel but probably not entirely accidental since most countries, especially Latin America, have been developing cryptocurrencies.
The Salvadoran president Nayib Bukele acknowledged the world’s trailblazer and possibly the most famous cryptocurrency with the support of other lawmakers. This means that Bitcoin is accepted as a means of exchange for goods and services.
President Nayib Bukele said that accepting Bitcoin as a legal tender would make it easier for how Salvadorans working abroad to send money home and vice versa. It was only a matter of weeks, and 200 Bitcoin ATMs were set up all over the country. To reinforce the use of Bitcoin as a legal tender, the government created a wallet called Chivo Wallet, which is controlled via a mobile application. Every Salvadoran who adopted the wallet was gifted $30.
With many Salvadorans not having bank accounts, the Chivo Wallet allows them to receive and send Bitcoins, convert them to fiat currency and withdraw them from the special ATMs. Even though El Salvador is among the smallest countries in Central America, the news of its adoption of cryptocurrency took the world by storm. It has made a massive impact on some other large countries in the region.
This effect could further spill over to Europe, the USA among other countries. While El Salvador is the first country to lay the first stone, it has paved the way for many other countries to jump into the bitcoin bandwagon, which begs the question.
Which Countries Are Next in Line to Adopt Bitcoin?
After the crucial decision of Salvadoran lawmakers to legalize Bitcoin, politicians in several South American countries took to social media to express their views on the issue.
Honduras and Guatemala?
In Honduras and Guatemala, both central banks are contemplating the use of Digital Currencies as per the officials, albeit with a different approach. Presently, they are researching Central Bank Digital Currencies (CBDC), intending to introduce them to the economy.
Wilfredo Cerrato, the president of the Honduras central bank, said the adoption of digital currencies in Central American countries should be handled in the Central American Monetary Council, an umbrella of all central bank authorities. This once more indicates how much they believe that cryptocurrency is the future. It is safe to say that they have chances of adopting Bitcoin as a legal tender, just like El Salvador.
Is Paraguay Set to Make Bitcoin Legal Tender in 2022?
Carlos Rejala, a legislator from Paraguay, said on social media that he supported President Bukele. Coindesk reports that Rejala has been monitoring the Bitcoin trend since 2017 and became a crypto trader in 2019. Rejala asserted that despite his lack of a majority in Congress, members of Congress and other parties are interested in and confident in his proposal’s adoption.
Last month, the Paraguayan senate passed a bill moving to regulate the trading and mining of Bitcoin and cryptocurrencies in the country.
What Are Chances of Panama to Accept Bitcoin as a Legal Tender?
In Panama, which borders El Salvador, there are legislative efforts to adopt Bitcoin legally. That means that Panama could as well adopt Bitcoin as a legal tender. Congressman Gabriel Silva also posted on his Twitter that it could create more job opportunities and attract foreign investors. He posted that,
Panama cannot be left behind if we want to be a true technology. entrepreneurship hub, we have to support cryptocurrencies.
Will Ukraine Officially Adpot BTC as its Currency?
For years now, cryptocurrency transactions have taken place under the radar in Ukraine, and there are no rules and regulations governing it. But in last year September, a law was passed by the Ukrainian parliament that legalized and governed the cryptocurrency industry. This law offers protection against cases of fraud for those who own cryptocurrencies. In contrast with El Salvador’s law, Ukraine’s crypto law does not facilitate bitcoin as the legal currency. It will not replace the Hryvnia, ㅡthe country’s legal currency.
The Ukrainian government’s decision to allow Bitcoin to be used as legitimate money is a positive sign that the government recognizes digital currencies. Ukraine’s cryptocurrency law covers the legal framework for digital currencies in the country. The government plans to allow businesses and investors into the Cryptocurrency market later this year.
What Motivates Governments to Accept Bitcoin as Legal tender?
Why are nations especially developing ones adopting Bitcoin as a legal tender? In third-world countries, inflation is high and traditional banking is unavailable to most people. This has created room for cryptocurrency to flourish and become part and parcel of daily life. With cryptocurrency, you only need a mobile phone to use cryptocurrency. Unlike traditional banking systems, which are cumbersome.
In El Salvador, around 70% of the entire population does not have access to banking services or just doesn’t use them. It is not in Central America only where mobile phones dwarf banking systems users but also in other regions such as Africa and India. Also, the adoption of cryptocurrencies is easy to beat inflation that has stricken most of these countries.
Cryptocurrency comes as a way of turning around an unstable economy. Like Cuba, it faces many sanctions instituted by former US President Donald Trump and has been carried on by the current president Joe Biden. The process of sending and receiving money in Cuba has been complicated due to the US sanctions, but now people can send and receive money via cryptocurrency, although there are a few hurdles on the way.
The IMF Warning on Cryptocurrency
The International Monetary Fund (IMF) has issued a warning on adopting Cryptocurrency as a Legal Tender. The IMF says some countries may be tempted to adopt cryptocurrencies as legal tender, but the risks surpass the potential advantages.
Generally, the world IMF is against the adoption of Bitcoin as a legal tender citing factors such as the high volatility, undermined consumer protection, ecological implications, internet accessibility, among other factors. It warns countries wishing to jump on cryptocurrency as a national currency bandwagon to proceed with caution.
The Bottom Line
There is no doubt that more countries are venturing into digital currencies, including the UK and the USA. Only a handful of countries have adopted Bitcoin as a legal tender so far, but more to come. We should expect broader adoption of cryptocurrencies worldwide. However, Cryptocurrency, just like any other thing, has its drawbacks, for example, volatility. It is still a work in progress.
More effort is being put into research to ensure that it gets better with time and becomes easier for mass adoption. Panama, Paraguay, Ukraine, Honduras, and Guatemala are most likely to adopt Bitcoin as a legal tender in 2022, and that does not rule out the fact that there could be more to join the list.