Bank of America, one of the largest US financial institutions by total assets, believes that El Salvador could have a lot to gain from adopting Bitcoin (BTC) as legal tender.
In a report published last week, the bank’s analysts said that El Salvador’s decision to recognize BTC as legal tender could streamline remittances, promote financial digitization, provide consumers with greater choice and open the country to US companies and digital currency miners.
The bank noted that remittances represent an exorbitant 24% of the Central American nation’s gross domestic product, but a considerable part goes to transaction fees.
“Using Bitcoin for remittances could potentially lower transaction costs compared to traditional remittance channels “, dice part of the report, according to an image provided by the state media, Diario El Salvador. “The idea is that Bitcoin could be used as an intermediary for international transfers, so that the dollars are converted to Bitcoin by the sender and then converted back to dollars domestically by the receiver.”
#ElSalvador President @nayibbukele share this morning some of the opportunities that @BankofAmerica see in El Salvador, after the adoption of the #Bitcoin pic.twitter.com/08D1RuGFYI
– El Salvador newspaper (@elsalvador) August 1, 2021
In June of this year, El Salvador became the first nation state to accept Bitcoin as legal tender, marking an important milestone in the evolution of digital currency from insignificance to mass acceptance. The decision to integrate BTC into the country’s financial system has been met with strong criticism from the International Monetary Fund and the Economic Commission for Latin America and the Caribbean. In the meantime, JPMorgan Chase believes that El Salvador’s bet on Bitcoin could exercise extra pressure on the already limited capacity of the network to serve as a medium of exchange.
Survey data shows that the half of Salvadorans are skeptical on the use of BTC as legal tender. Those who decide to adopt BTC for transactions can use the state-backed Chivo wallet, among many other options available.
Since El Salvador recognized Bitcoin as legal tender, several other Latin American countries have hinted at the possibility of follow your own strategies to adopt cryptocurrency. However, so far, no other country has followed in El Salvador’s footsteps.
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