A list of countries where bitcoin is considered legal has been published

Central banks and regulators of countries usually decide what is considered legal tender in their economies. Therefore, if a central bank explicitly declares bitcoin to be such a medium, it becomes an official financial component of the economy.

The growth of BTC and several other decentralized cryptocurrencies has prompted a number of central banks to consider digital currencies as a more reliable alternative to fiat currencies. As a result, many countries, including China, the United Kingdom, the United States, and India, are working on central bank digital currencies (CBDCs).

El Salvador became the first country to accept bitcoin as legal tender. The president of this small country in Central America is considered to be a dedicated cryptocurrency ambassador.

The second country to introduce bitcoin into financial circulation was the Central African Republic (CAR). The country is rich in gold and diamonds, but financial accessibility is quite low, so the CAR depends on remittances. In addition to accepting bitcoin, the country also announced that 20% of their treasury will be held in Sango Coin (SANGO), a digital currency that will show the status of minerals and other natural resources that the country possesses.

Both El Salvador and the CAR have determined that they want to make remittances to the country cheaper. El Salvador’s President Naib Buchele predicted savings of $ 400 million in remittances as the country switches to a bitcoin infrastructure. By using the Bitcoin Lightning network, payments could be cheaper than current methods.

What are the problems associated with accepting bitcoin as legal tender?

There are liquidity risks and regulatory risks of the crypto market that a country will assume when it starts using it as legal tender. Since the cryptocurrency market is closely linked to the US stock markets, changes in the Federal Reserve’s policy will affect cryptocurrency prices.

On the other hand, due to the decentralized nature of cryptocurrencies, a ban on BTC in one national jurisdiction does not directly affect its legal status in another jurisdiction. However, when a country such as the United States strictly regulates cryptocurrencies, the market reacts to this. The resulting price change can affect all countries that use bitcoin as legal tender or as a reserve currency.