Bitcoin and El Salvador’s plan to legalise it face trouble
El Salvador is a Latin American nation. Famous for volcanos, the small yet thickly populated country recently became known for being the first nation to legalise Bitcoin. El Salvador uses the US Dollar as a legal tender as it is one of the few nations that doesn’t have its own currency. Before taking the Bitcoin legalisation proposal to the national assembly for approval, President Nayib Bukele wrote, “It will bring financial inclusion, investment, tourism, innovation, and economic development for the country”. The bill got passed, and it will take effect in September this year.
Although the decision is considered historic, it is now facing several hurdles and opposition. Concerned with these developments in El Salvador, the United States sent its Under Secretary of State for Political Affairs, Victoria Nuland, to meet Salvadorian President Nayib Bukele. Secretary Nuland told President Bukele that El Salvador must ensure that its system is well-regulated, transparent and responsible. Nuland also raised fears about ‘malign actors’ taking advantage of the new system. There is bipartisan opposition to Bitcoin in the US. Former President Donald Trump has called Bitcoin a ‘scam against the US Dollar’ while the Biden administration has recently ruled to report $10,000-plus cryptocurrency transfers to the Internal Revenue Service (IRS) for limiting illegal activity.
Not just the United States, El Salvador’s decision does not seem to have gone down with the World Bank either. Last month, the World Bank rejected El Salvador’s request to help legalise Bitcoin as an official currency. Moreover, the International Monetary Fund (IMF) has also conveyed its concerns to El Salvador for Bitcoin legalisation.
Meanwhile, the United Kingdom has banned Binance, one of the world’s largest cryptocurrency exchanges. Moreover, Binance is facing growing scrutiny across the globe. Thailand has filed a criminal complaint against the exchange, while the Cayman Islands has reported that Binance was not authorised to operate in their land. Besides, Japan and Singapore are also mulling similar actions.
Apart from all this, Bitcoin is facing increasing heat in China. Also, the Indian government is quite averse to risky cryptocurrencies and is gradually taking steps to curb them.
For the associated volatility and the global scrutiny it faces, Bitcoin appears headed for trouble. Also, with growing opposition to El Salvador’s decision to legalise Bitcoin, it may face challenges increasingly. However, amid all this, some experts consider El Salvador’s move as an alert for others to create safe alternatives to unsafe cryptocurrencies.