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After El Salvador is leading the world in recognizing bitcoin as legal tender, a government adviser said on the 10th that it will exempt foreign investors from tax on bitcoin speculation in El Salvador.
President Nayib Bukele’s legal adviser, Javier Argueta said that if a person has assets in bitcoin and makes high profits, there will be no tax. This is obviously done to encourage foreign investment. He said that there will be no tax on either the capital increase or related income.
El Salvador was the first country in the world to officially use Bitcoin as legal tender on the 7th. President Nayib Bukele said that it will help people living abroad remit money to home, and saving millions handling fees in US dollars on remittances. However, experts and officials have highlighted concerns about the cryptocurrency’s infamous volatility, its potential impact on price inflation in a country with significant poverty and unemployment, and the lack of user security. There are also concerns about its potential for illegal usage, particularly in the laundering money from criminal activities such as drug trafficking and terrorism financing.
According to Argueta, the cyber “wallet” that allows Salvadorans to buy and spend bitcoin at home and abroad, includes necessary measures to ensure traceability. He said that El Salvador is implementing a series of recommendations from international institutions against money laundering. In order to minimize the impact of extreme currency fluctuation, once the value of Bitcoin plummets, Bitcoin transactions will be temporarily blocked.
