It appears that El Salvador president Nayib Bukele is facing many obstacles in his plan to establish a society with bitcoin (BTC) due to internal worries regarding the very popular cryptocurrency. Bitcoin payment might not be applicable in El Salvador because of lack of support from nearly all the general public.
Paying in Bitcoin may not apply El Salvador
As reported, the Salvadoran government’s labour director has suggested that the cabinet is set to debate the issue of whether firms in the nation ought to pay employees in BTC rather than USD. However, this resulted in an outcry, and the exact same minister denied these claims and said that the issue would be set by government finance officials.
But based on ElSalvador.com (author of this paper El Diario p Hoy), a survey conducted by the Salvadoran Chamber of Commerce revealed that BTC could be warmly received throughout the country.
In reality, the poll found civilian and corporate players interviewed — with a whopping 93 percent of employees responding they don’t want to get their salary in BTC. Meanwhile, 82.5% state they’re also not interested in receiving remittances in bitcoin. (Remittances accounts for 23 percent of El Salvador’s gross domestic product and benefit about 360,000 families, based on AP data. The sum of money that migrants send back to El Salvador hit a record high of 5.92 billion USD from 2020)
Participants were asked what they would do if they received a payment in bitcoin, with over half saying they would convert the token to USD immediately.
Entrepreneurs were asked about their expectations for BTC adoption, with 11% agreeing that the transfer will bring investment into the country.
But 17% insist that the move won’t alter anything for El Salvador, while 48% say BTC adoption won’t attract investment, create jobs, and will do nothing to enhance it. improve the economy.
And it appears the government has taken note: Finance Minister Alejandro Zelaya verified that wages will continue to be made in USD, not BTC. The same press reported that Zelaya said that “we are not replacing the dollar” using the new BTC law.
Obstacles on the Road to Bitcoin Standard Adoption in El Salvador
On Twitter, one commentator pointed out that lots of ordinary Salvadorans are not certain what the BTC world has in store for them.
Meanwhile, in reaction to people who have voiced accusations of BTC’s role in global money laundering efforts, Zelaya countered:
“There is no risk-free currency used to facilitate money laundering.”
But this might not be enough to convince a few people.
Lawyers have warned that failure to fulfill Financial Action Task Force (FATF) standards on cryptocurrency exchange policy will cause the nation being categorized as a “tax haven””.
José Rolando Monroy, former leader of the Salvadoran Financial Investigation Unit, has been quoted as stating that the adoption of BTC without additional implementation of Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) protocols. Would result in moves “not only by the FATF, but also by the international community as a jurisdiction that is vulnerable to both money laundering and terrorist financing”.
Meanwhile, in reaction to people who spoke out to current BTC games in the worldwide currency evaluations, Zelaya countered:
“There is no risk-free currency used to facilitate money laundering.”
As previously mentioned, although President Bukele has received plenty of support, economists still need to repeal the Bitcoin legislation in this country due to many financial instability issues.
Moody’s Investment Services stated that, based on ElSalvador.com (publisher of this Salvadorian paper El Diario p Hoy),”using BTC as a money parallel to the USD presents threats to the fiscal system. , the stability of the nation’s monetary regime and indicated the absence of a consistent economic framework since the International Monetary Fund was not likely to have consulted the law whilst negotiating economic measures. And financing associated with the grant program.”
The media also quoted Manuel Enrique Hinds, a former Salvadoran finance minister( as caution:
“This move could cause a very serious crisis in the country, because we pay everything in dollars. We can take risks by depositing in bitcoins. Prices can change in a matter of hours and even though the government has said it will guarantee the price, a $150 million fund is not enough to do that.”
And the exact media individually reported that the El Salvador College of Professional Sciences in Economic Sciences (COLPROCE), a group of financial experts, had asked the country’s parliament into “repeal” the law. Recently handed:
“The conversion of bitcoin from its crypto state to legal tender, was approved without conducting studies demonstrating its viability and applicability to the Salvadorian economy. Most experts in monetary and financial economics, both domestic and foreign, believe that the adoption of bitcoin puts economic stability at risk. Bitcoin could create a financial bubble and turn El Salvador into a tax haven,” the team said.
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