A woman withdraws money from an Athena Bitcoin ATM. Salvadoran President Nayib Bukele has announced that he will propose a law to Congress, in which his party controls the majority, to make Bitcoin legal tender.

Camilo Freedman | LightRakete | Getty Images

El Salvador was the first country to introduce Bitcoin as legal tender.

The legislature in Congress of the Central American country voted with a “super majority” for the Bitcoin law and received 62 out of 84 of the legislature’s votes.

Bitcoin price rose 5% to $ 34,239.17 shortly after the vote.

On Wednesday, President Nayib Bukele put the law to a vote in Congress.

“The purpose of this law is to regulate Bitcoin as unrestricted legal tender with liberating power, indefinitely in every transaction and for every title that public or private natural or legal persons demand,” the law says.

Prices can now be shown in Bitcoin, tax contributions can be paid with the digital currency and the exchange into Bitcoin is not subject to capital gains tax.

Bitcoin is known for wildly fluctuating prices that have led critics to believe that it is unsuitable as an effective currency. It is still unclear how El Salvador will ultimately adopt Bitcoin as legal tender.

According to the law, the exchange rate to the US dollar is “freely determined by the market”. The current official currency of El Salvador is the US dollar.

The law also states that the state “will promote the necessary training and mechanisms so that the population can access Bitcoin transactions”.

About 70% of El Salvador do not have access to traditional financial services under the Bitcoin law. The cryptocurrency is seen as a way to increase financial inclusion.

Bukele brought the bill to Congress after announcing last week that El Salvador had partnered with digital wallet company Strike to build the country’s modern financial infrastructure using bitcoin technology.

Bitcoin hit a record high of $ 64,829.14 in April but has fallen by almost half since then, according to CoinDesk data. It’s still up over 230% in the past 12 months. This increase has been attributed to several factors, including rising interest from institutional investors and large companies like Tesla and Square buying bitcoin.