The United Nations Regional Commission is the latest body to express reservations about El Salvador’s proposal to make bitcoin legal tender.
The Economic Organization for Latin America and the Caribbean, or ECLAC, a United Nations regional commission that promotes economic cooperation, is the latest regulator to express reservations over El Salvador‘s plan to allow bitcoin to be used as a form of legal cash. According to ECLAC executive secretary Alicia Bárcena, El Salvador‘s foray into bitcoin offers several systemic dangers and money laundering issues.
“The Financial Action Task Force is likely to scrutinize El Salvador and pose risks.”
The ECLAC executive also stated that no study has yet been conducted to look at the hazards or benefits of El Salvador recognizing BTC as legal money. However, she expressed confidence that the Central American country will be scrutinized and risked by the Financial Action Task Force, or FATF, due to its decision to enter the Bitcoin market. In a dollarized economy, the official noted, Bitcoin does not fulfill several essential functions of money and is vulnerable to excessive volatility, which might pose “many systemic dangers.”
Financial regulators have continued to criticize El Salvador.
After Salvadorian President Nayib Bukele introduced historic legislation in early June, ECLAC has joined a growing number of worldwide authorities and groups concerned about El Salvador‘s plan to use bitcoin as legal tender. One of the first regulators to raise the issue was the International Monetary Fund, which warned that recognizing Bitcoin as legal cash in the country could cause legal and financial problems. Previously, the World Bank turned down El Salvador‘s request for assistance in implementing Bitcoin, citing concerns about the currency’s supposed environmental impact and lack of transparency.