JPMorgan notes that countries similar to El Salvador could make Bitcoin legal tender – Bitcoin News

JPMorgan is struggling to “see all the tangible economic benefits associated with the introduction of Bitcoin as legal tender”. Regarding the Bitcoinization of El Salvador, JPMorgan did not rule out that the country’s move to make cryptocurrency legal tender could “mark the beginning of a broader trend among similarly located, smaller nations.”

JPMorgan’s position on Bitcoinization in El Salvador

Investment bank JPMorgan publishes a report Friday entitled “The Bitcoinization of El Salvador”. The country’s Congress on Wednesday became the first country to pass the law making Bitcoin legal tender.

JPMorgan described, “El Salvador recently passed a law making Bitcoin legal tender and will seek to introduce a bimonetary system with the US dollar as the primary unit of account but accepting Bitcoin as the currency for all economic activity.”

The investment bank added, “As with dollarization in the early 2000s, this move does not seem to be motivated by stability concerns, but rather growth-oriented,” and states:

With the introduction of Bitcoin as the second legal tender, there are barely any tangible economic benefits to be seen, and this could jeopardize negotiations with the IMF.

The International Monetary Fund (IMF) has already raised concerns about El Salvador’s move to make Bitcoin legal tender, citing legal and economic issues. El Salvador is currently trying to get a billion dollar loan from the IMF.

An official from the Bank for International Settlements (BIS) has also expressed doubts about El Salvador’s Bitcoin law, calling it an “interesting experiment,” but stressed that the BIS does not see Bitcoin as a means of payment.

The JPMorgan report also notes that there are questions about how Bitcoin will be treated by larger economies when it is legal tender in El Salvador. The bank warned that any change in treatment would “arguably be an unintended consequence of laws and regulations that are much older and understandably did not anticipate cryptocurrency”. Even so, the bank said:

These steps can be complicated when this is the beginning of a broader trend among similarly located, smaller nations.

After El Salvador passed law to make Bitcoin legal tender, President Nayib Bukele said the country would mine BTC using energy from volcanoes. He said it will be “very cheap, 100% clean, 100% renewable, zero emissions from our volcanoes”.

Do you think other countries will follow El Salvador’s example and make Bitcoin legal tender? Let us know in the comment section below.

Photo credits: Shutterstock, Pixabay, Wiki Commons

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