Is Remittance-Dependent Tonga the Next Nation to Adopt Bitcoin as Legal Tender?

October 06, 2021, 10:30 AM AEST - 1 week ago

The small Polynesian island nation of Tonga will follow the example set last month by El Salvador in making bitcoin legal tender, if at least one senior politician has his way.

Like the Central American republic, Tonga is one of the world’s most remittance-dependent economies. Tongan MP, barrister, hereditary landowner and bitcoin advocate Lord Fusitu’a believes the adoption of bitcoin as legal tender in Tonga can potentially offset the high remittance commissions charged by money transfer services such as Western Union.

Last month, Crypto News Australia reported that El Salvador’s bitcoin adoption could cost Western Union US$400 million per year.

Between 38 percent and 41.1 percent of our GDP, depending on which World Bank figures you use, is remittances. To get those remittances to Tonga, Western Union takes a 30 percent bite out of them, on average. In El Salvador, it’s closer to 50 percent.

Tongan MP Lord Fusitu’a

Fusitu’a believes bitcoin has a place in the Tongan financial ecosystem and believes it could work using digital wallets such as Strike. He also suggests that bitcoin payment apps could be adopted en masse as they would not require a parliamentary order to implement.

Bitcoin is the first truly global natively open monetary system. Blockchain is the most optimal storage medium for money if your goal is decentralisation and complete, egalitarian democratisation of money.

Tongan MP Lord Fusitu’a

Choice of Wallet Could Be a Problem

Fusitu’a cites Strike, the digital wallet of Chicago-based Zap Solutions, as a potential means of accepting bitcoin as payment in Tonga. He claims that using Strike to send money back to Tonga from countries such as New Zealand would not require an act of parliament or even an endorsement by the National Reserve Bank of Tonga.

However, earlier this year it was found that Zap Solutions lacked the licences to operate in most US states, potentially meaning most cash and crypto transfers to El Salvador using Strike are illegal. That would have obvious implications for Tonga.

Fusitu’a’s enthusiasm for bitcoin is not shared by everyone in Tonga. Sione Ngongo Kioa, governor of the Pacific island nation’s reserve bank, has already indicated the bank has no intention of accepting bitcoin as legal tender. 

“The adoption of bitcoin as an official alternative currency is definitely unlikely,” Kioa said.

Disclaimer: The content and views expressed in the articles are those of the original authors own and are not necessarily the views of Crypto News. We do actively check all our content for accuracy to help protect our readers. This article content and links to external third-parties is included for information and entertainment purposes. It is not financial advice. Please do your own research before participating.