• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

Factbox-Pros and cons for El Salvador, the first bitcoin nation

September 6, 2021 by David Barret Leave a Comment

September 6, 2021

SAN SALVADOR (Reuters) – El Salvador will on Tuesday become the first country in the world to recognize bitcoin as legal tender, a move President Nayib Bukele says will save Salvadorans living abroad millions of dollars in commissions on money they send home.

Despite Bukele’s popularity, the move has been greeted with skepticism by many Salvadorans who are concerned about the cryptocurrency’s volatility and how his scheme will work.

Following are some of the pros and cons that have surfaced over the El Salvador plan, first launched in June.

REMITTANCES

Salvadorans last year sent home almost $6 billion from abroad, mostly from the United States. The sum is equivalent to some 23% of the country’s gross domestic product.

Bukele said last month bitcoin would deliver “huge benefits” because it would allow Salvadorans to save on $400 million he said was spent each year in commissions for remittances.

But many of the very people sending or receiving dollars to El Salvador are mistrustful of bitcoin https://ift.tt/3DQwiWh. Meanwhile, World Bank data shows that the dollarized Central American country’s U.S. remittance costs are already some of the lowest worldwide.

CARBON FOOTPRINT

El Salvador’s bitcoin plan has put a spotlight on the environmental impact https://ift.tt/3l2Q4oO of cryptocurrencies, with the World Bank flagging such potential adverse affects among its concerns.

Extracting digital currency from cyberspace requires large amounts of energy, and the bitcoin industry’s global CO2 emissions have risen to 60 million tons, equal to the exhaust from about 9 million cars, Bank of America said in March.

Bukele sought to counter sustainability concerns by saying in June https://ift.tt/3hrqg59 he had instructed state-owned geothermal electric firm LaGeo to develop a plan to offer bitcoin mining facilities using renewable energy from the country’s volcanoes.

REGULATORY COMPLIANCE

While advocates pitch bitcoin as innovation that is independent of governmental caprice, it has sparked warnings that it could increase regulatory, financial and operational hazards for financial institutions, among them international anti-money laundering and terrorist financing rules.

In June, rating agency Fitch Ratings noted that “capital gains will not be taxed and taxes can be paid in bitcoin, which could attract foreign inflows of bitcoin to the country. This may increase the risks that proceeds from illicit activities pass through the Salvadoran financial system.”

The International Monetary Fund has cited legal concerns about bitcoin’s adoption amid its talks with El Salvador over a nearly $1 billion financing agreement, which remains pending.

After Bukele’s bitcoin law was approved, rating agency Moody’s downgraded El Salvador’s creditworthiness. The country’s dollar-denominated bonds have also come under pressure https://ift.tt/3hrqgCb.

FOREIGN EXCHANGE

Bukele has set up a $150 million fund https://ift.tt/3n9uGBi to enable conversion of bitcoin into dollars, but doubts persist over how the country will avoid risks linked to sharp fluctuations in the digital currency, whose value can vary by hundreds of dollars in a day.

Fitch argued that bitcoin would be credit negative https://ift.tt/2WUI6WL for Salvadoran insurance companies exposed to the currency due to higher foreign exchange and earnings volatility risk.

“Insurers that hold bitcoin on their balance sheets for extended periods will be acutely exposed to its price volatility, increasing asset risk,” Fitch said last month.

Still, for those holding bitcoin, it has proven a popular means of payment in El Zonte, a beach town that was one of the springboards for the cryptocurrency in El Salvador.

Provided there are no snags with convertibility, that has spurred hopes it could be an important foreign exchange earner.

(Compiled by Dave Graham and Anthony Esposito; Editing by Dan Grebler)

Source Link Factbox-Pros and cons for El Salvador, the first bitcoin nation

David Barret
David Barret

Related posts:

  1. Fate of national daycare in the hands of Canadian voters
  2. With a little help from their friends: how The Sims 4’s community has helped shape the game
  3. Pancake aims to make customers flip for its virtual home design platform
  4. Best cordless vacuum 2021: The top models for pet hair and hardwood floors we’ve tested

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • Why Are So Many Enormous Roman Shoes Being Discovered At Hadrian’s Wall?
  • Scientists Think They’ve Pinpointed Structural Differences In Psychopaths’ Brains
  • We’ve Found Our Third-Ever Interstellar Visitor, Orcas Filmed Kissing (With Tongues) In The Wild, And Much More This Week
  • The “Eyes Of Clavius” Will Be Visible On The Moon Today, Thanks To Clair-Obscur Effect
  • Shockingly High Microplastic Levels Found On Remote Mediterranean Coral Reef Island
  • Interstellar Object, Cheesy Nightmares, And Smooching Orcas
  • World’s Largest Martian Meteorite Up For Auction Could Reach Whopping $2-4 Million
  • Kimalu The Beluga Whale Undergoes Pioneering Surgery And Becomes First Beluga To Survive General Aesthetic
  • The 1986 Soviet Space Mission That’s Never Been Repeated: Mir To Salyut And Back Again
  • Grisly Incident In Yellowstone National Park Shows Just How Dangerous This Vibrant Wilderness Can Be
  • Out Of All Greenhouse Gas Emitters On Earth, One US Organization Takes The Biscuit
  • Overly Ambitious Adder Attempts To Eat Hare 10 Times Its Mass In Gnarly Video
  • How Fast Does A Spacecraft Need To Go To Escape The Solar System?
  • President Trump’s Cuts To USAID Could Result In A “Staggering” 14 Million Avoidable Deaths By 2030
  • Dzo: Hybrids Beasts That Are Perfectly Crafted For Life On Earth’s Highest Mountains
  • “Rarest Event Ever” Had A Half-Life 1 Trillion Times Longer Than The Age Of The Universe – How Did We See It?
  • Meet The Bille, A Self-Righting Tetrahedron That Nobody Was Sure Could Exist
  • Neurogenesis Confirmed: Adult Brains Really Do Make New Hippocampal Neurons
  • RFK Jr Suggested Letting Bird Flu Run Through Farms – Experts Still Think It’s A Bad Idea
  • “For Unknown Reasons”: Mystery Of The Oldest Human Remains Ever Found In Antarctica
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version