Friday, July 30, 2021

El Salvador’s decision to make bitcoin a legal tender draws criticism from global regulators.

The Takeaway:

El Salvador made history by becoming the first nation to recognize Bitcoin as legal tender, but the historic decision has drawn criticism from global regulators.

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While the president of El Salvador Nayib Bukele’s decision to authorize bitcoin as legal tender has met with cheers and applause from the crypto community, it has drawn criticism from global regulators. Many prominent crypto leaders pledged to help El Salvador by opening local offices in the country. However, this all comes at a cost. One of these is the Central American country’s relations with global organizations, with one of them already expressing concerns.


IMF spokesperson says adopting bitcoin as legal tender raises many concerns. 

In a recent press briefing, Gerry Rice, an IMF spokesperson, stated that the adoption of bitcoin as legal tender raises a number of macroeconomic, financial, and legal issues that require very careful analysis. We are following developments closely, and we’ll continue our consultations with the authorities. El Salvador’s decision to authorize bitcoin as legal tender is being claimed as a historic and milestone in the crypto community. The country is even working on providing clean energy to bitcoin mining farms. 


El Salvador’s bonds dropped in international markets.

While President Bukele’s decision was great for the crypto and its community, there could be dire consequences for the Salvadorians. Already, the Central American country has had a huge effect on its bonds in the international markets. Foreign investors are now demanding higher premiums to hold the country’s debt. In addition, many expressed concern about the future of an IMF deal they believe will play a key role for the country. Upon the warning by the IMF, El Salvador’s bonds dropped in international markets. According to Bloomberg, the country’s bonds are now the worst performers in emerging markets this week. Nevertheless, it would be interesting to see how El Salvador deals with the positive and negative consequences of adopting bitcoin as legal tender. 

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

Jai Pratap
Jai Pratap
A Mass Media Graduate who loves to write. Jai is also a sports enthusiast and a big movie buff. He loves to learn new things.

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