Following El Salvador’s move to adopt bitcoin as a legal tender in the country, Wall Street giant JPMorgan seems not to be impressed by such a monumental decision from the Central American nation.
JPMorgan Comments on El Salvador’s Bitcoin Move
In a recent note to investors, as tweeted by Financial Times correspondent Robin Wigglesworth, JPMorgan commented that the recent move made by El Salvador to make bitcoin legal tender was growth-oriented. However, the American investment bank seemed to imply that the decision by the country had no economic benefit, adding that it could hinder its negotiations with the International Monetary Fund (IMF)
According to a statement from JPMorgan:
“It is difficult to see any tangible economic benefits associated with adopting bitcoin as a second form of legal tender and it may imperil negotiations with the IMF.”
Indeed, the IMF made comments about El Salvador’s move to legalize bitcoin, Gery Rice, spokesperson for the IMF, stating that there were economic and legal concerns regarding the country’s decision. According to Rice:
“Adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis. We are following developments closely, and we’ll continue our consultations with the authorities.”
El Salvador became the first country to make bitcoin a legal tender alongside the dollar, following a supermajority decision from the country’s Congress. President Nayib Bukele also stated that the government would give citizenship to individuals who invest bitcoin in the country’s economy. Lately, Bukele announced plans to use energy from its volcanoes for bitcoin mining activities.
BIS Joins El Salvador’s Skeptics
JPMorgan further said that El Salvador’s decision could affect the way bitcoin is treated in bigger countries.
“The question remains whether the designation of bitcoin as legal tender by a widely-recognized sovereign nation has mechanical implications for its treatment in much larger economies under the tax law, banking and financial regulations, and other areas.”
While El Salvador’s move to legalize bitcoin has seen tremendous support from the cryptocurrency community, the move continues to receive skepticism. In addition to JPMorgan and the IMF, the Bank for International Settlements (BIS) has also weighed in on the matter.
Benoit Coeure, the BIS head of the innovation hub, called El Salvador’s decision to adopt bitcoin as a legal tender an “interesting experiment.” However, he said that bitcoin is a speculative asset, adding that the BIS believes that BTC does not qualify as a payment method.