The Bank of Spain, the country’s central bank, criticized El Salvador’s adoption process when it declared Bitcoin to be legal tender last month. In a report titled “The Role of Crypto Assets as Legal Tender: The Example of El Salvador,” the bank examines several issues the country faces in implementing its Bitcoin strategy, and is concerned about how some actions were taken with little transparency.
Bank of Spain scrutinizes El Salvador Bitcoin bet
The Bank of Spain has issued a report scrutinize and reflect on El Salvador’s entry into the Bitcoin world. The report, titled “The Role of Crypto Assets as Legal Tender: The Example of El Salvador,” written by Sergio Gorjón, of the General Directorate of Operations, Markets and Payment Systems, states that as the first errors in the implementation of Bitcoin as legal tender.
One of the main concerns of the Bank of Spain concerns the relative lack of transparency shown by the project. The report states:
Another limiting factor was the opacity and lack of consensus with which the project was carried out. Thus, the main global rating agencies have agreed to downgrade El Salvador’s sovereign credit rating.
Other problems detected
The Bank of Spain has found other issues regarding El Salvador’s switch to Bitcoin. The institution agreed with the opinion of Vitalik Buterin, co-founder of Ethereum, who said that it is risky to virtually force Bitcoin to an untrained and crypto-savvy population. The Bank of Spain underlined:
With just over 50% of its population having Internet access and a smartphone market share barely reaching 40%, El Salvador ranks last among Central American countries in terms of digital education level.
However, the bank praised El Salvador for the steps it is taking to address concerns over the use of bitcoin as a means of financing terrorism or for money laundering purposes. The bank indicated that the regulations enacted by the country consider these problems in depth, and make it possible to strengthen the control measures against these risks.
What do you think of the Bank of Spain’s opinion on El Salvador? Tell us in the comments section below.
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