El Salvador's efforts to appeal to cryptocurrency enthusiasts continued Friday, with a report from Agence France-Presse (AFP) revealing that the country has decided to exempt foreign investors from taxes on profits earned via Bitcoin speculation.
Bitcoin speculation effectively treats the cryptocurrency like an asset that investors want to buy when it's under-valued and sell when it's over-valued. The crypto market's volatility makes it an excellent candidate for people willing to hold on to a coin until something like, say, a company going public makes its value skyrocket.
It can be hard for Bitcoin speculators to figure out how much they owe in taxes. (Or, as with any other form of investment, how to minimize the amount they'll need to pay.) At least it can be in the United States—but now El Salvador's making it clear that Bitcoin speculators won't actually have to pay anything when tax season comes around.
"If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment," One of Bitcoin enthusiast President Nayib Bukele's legal advisers, Javier Argueta, said in an interview with AFP. "There will be no taxes to pay on either the capital increase or the income."
The report was published just two days after El Salvador became the first country to accept Bitcoin as legal tender. That wasn't a smooth transition—especially since Bitcoin's value dropped from $52,944 to $42,830 that morning—but the appeal to foreign investors shows that El Salvador remains committed to the cryptocurrency.