John Dennehy on Nostr: Good morning from El Salvador We are now in DAY TWELVE since the government rescinded ...
Good morning from El Salvador
We are now in DAY TWELVE since the government rescinded Bitcoin as legal tender, at the request of the IMF (effective after 90 days)
There has been a lot of confusion over the term 'legal tender,' so let's look at what it is and what's changed (or soon will) in El Salvador
"Legal tender is a form of money that courts of law are required to recognize as satisfactory payment in court for any monetary debt"
That had been the case in El Salvador after the passage of the Bitcoin Law in 2021. It was not often enforced though which may be part of the confusion. Regardless of how aggressively it was enforced, Bitcoin was legal tender
The government will now be expressly prohibited from using Bitcoin (taxes, fees, etc.), however Bitcoin will continue to be legal in El Salvador and if two private parties voluntary wish to use Bitcoin to settle a debt they are free to do so. That may be a second point of confusion--'legal' and 'legal tender' are two very different things. Bitcoin is 'legal' in most of the world--what had made El Salvador special was that it was 'legal tender'
The real world consequences of El Salvador dropping Bitcoin as legal tender are numerous. Here, there are reports of stores and landlords already dropping Bitcoin as a payment option. The biggest impact will be international though. The global financial bureaucracy is slow but had Bitcoin remained as legal tender it would have had to be recognized by large institutions such as the IMF and eventually every nation in the world as such which would give it certain protections and tax advantages
It also sets a terrible precedent--the first nation to adopt Bitcoin as legal tender had to reverse that policy after three years. This will make it more difficult for future nations to adopt legal tender laws and without it as legal tender international institutions can continue to treat it as second-class
This was a big deal in 2021 when it was passed and it's just as a big a deal in 2025 when it was removed
Plenty of mistakes were made, which is to be expected when anything is being pioneered, and now is the time to acknowledge them so we can learn from them. That is how we will improve. That is how we will win
Onward!
We are now in DAY TWELVE since the government rescinded Bitcoin as legal tender, at the request of the IMF (effective after 90 days)
There has been a lot of confusion over the term 'legal tender,' so let's look at what it is and what's changed (or soon will) in El Salvador
"Legal tender is a form of money that courts of law are required to recognize as satisfactory payment in court for any monetary debt"
That had been the case in El Salvador after the passage of the Bitcoin Law in 2021. It was not often enforced though which may be part of the confusion. Regardless of how aggressively it was enforced, Bitcoin was legal tender
The government will now be expressly prohibited from using Bitcoin (taxes, fees, etc.), however Bitcoin will continue to be legal in El Salvador and if two private parties voluntary wish to use Bitcoin to settle a debt they are free to do so. That may be a second point of confusion--'legal' and 'legal tender' are two very different things. Bitcoin is 'legal' in most of the world--what had made El Salvador special was that it was 'legal tender'
The real world consequences of El Salvador dropping Bitcoin as legal tender are numerous. Here, there are reports of stores and landlords already dropping Bitcoin as a payment option. The biggest impact will be international though. The global financial bureaucracy is slow but had Bitcoin remained as legal tender it would have had to be recognized by large institutions such as the IMF and eventually every nation in the world as such which would give it certain protections and tax advantages
It also sets a terrible precedent--the first nation to adopt Bitcoin as legal tender had to reverse that policy after three years. This will make it more difficult for future nations to adopt legal tender laws and without it as legal tender international institutions can continue to treat it as second-class
This was a big deal in 2021 when it was passed and it's just as a big a deal in 2025 when it was removed
Plenty of mistakes were made, which is to be expected when anything is being pioneered, and now is the time to acknowledge them so we can learn from them. That is how we will improve. That is how we will win
Onward!