El Salvador’s BTC Adoption May Have Unintended Impact: JPMorgan

One of the world’s largest investment banks, JPMorgan Chase & Co. is lukewarm towards El Salvador’s BTC adoption. The institution sees no economic benefits in the legislation and believes that it may complicate the country’s negotiation terms with the International Monetary Fund(IMF).

JPMorgan Suggests El Salvador’s BTC Adoption May Affect Treatment By Other Economies

Analysts at JPMorgan have emphasized that El Salvador’s Bitcoin legalization has potential for mechanical implications for larger economies. In its most recent note, the institution states, “Any such change in treatment would arguably be an unintended consequence of laws and regulations that significantly predate, and understandably did not anticipate cryptocurrency.”

JPMorgan suggests that it’s hard to see any “tangible economic benefits” in the legislation and that it carries the potential to jeopardize El Salvador’s negotiation for a $1.3 billion loan with the IMF.

For its part, the international organization has expressed its displeasure with the groundbreaking legislation. On Thursday, the IMF said that it was concerned about the legal and economic issues arising from the move.

BIS Innovation Hub Lead Calls El Salvador’s BTC Legislation an “Interesting Experiment”

Benoit Coeure, head of the Bank for International Settlements’(BIS) Innovation Hub, has termed El Salvador’s BTC legislation as an “interesting experiment”. In an email correspondence with a media outlet, Coeure said, “It’s an interesting experiment, indeed. I think we’ve been clear at the BIS that we don’t see Bitcoin as having passed the test as being a means of payment. Bitcoin is a speculative asset and should be regulated as such.”

During an earlier interview with Bloomberg, Coeure pointed out that Bitcoin’s volatility makes it impossible to consider the digital asset as a currency. He added that Bitcoin could be used as an investment vehicle but it had failed the test of being a payment instrument because its value keeps changing.

El Salvador’s intention to legalize Bitcoin was first announced by the country’s president Nayib Bukele, in a recorded message at the Bitcoin 2021 Conference, held in Miami. Two days ago, the tropical country passed the legislation with a supermajority. It would take 90 days for the law to take effect in the country.