UN’s ECLAC not in favor of El Salvador’s Bitcoin (BTC) Legal Tender

  • After FATF and IMF, now UN’s regional commission ECLAC has raised concerns over El Salvador’s Bitcoin legal tender.
  • El Salvador made Bitcoin a legal tender last month to provide direct access to 70% unbanked population.
UN’s regional commission, the Economic Commission for Latin America and the Caribbean (ECLAC) has shown apprehension on El Salvador’s Bitcoin incorporation as a Legal Tender. With this ECLAC has joined the long line of organizations that have shown discomfort with making the use of decentralized currency legal in daily routine by El Salvador.

Alicia Bárcena Ibarra, Executive Secretary of ECLAC, raised concerns regarding El Salvador’s decision during an online conference where she presented the impact of the pandemic in the Latin American region. Alicia Bárcena said that ECLAC is waiting for El Salvador to implement the legal changes, however, she also warned the nation of potential security threats that Bitcoin as a legal tender can cause.

“many macroeconomic, financial and legal challenges, that the truth requires a much more careful analysis…there is no known technical study that can tell us about the risks or benefits that it could have for El Salvador.”, said Bárcena.

FATF & IMF advice against El Salvador’s Bitcoin Legal Tender

ECLAC is apprehensive of the response from the Financial Action Task Force (FATF), upon implementation of the law. With the increased risk of money laundering and several other data breaches, El Salvador is positioning itself for an unpleasant series of investigative visits from FATF.

It is also clear that the country could face, when this law enters into force, the Financial Action Task Force (FATF), which is the world’s highest authority against money laundering and, well, those are some of the risks that are they can face,” Bárcena added.

The list of influential global organizations opposing El Salvador’s decision is long. The International Monetary Fund (IMF) recently warned the country of manifold legal and financial consequences that may face upon implementation of Bitcoin’s legal tender. Gerry Rice, IMF’s spokesperson stated during a press briefing from IMF, several concerns of the organization, referring to Bitcoin and circling back to the approval of an emergency loan taken by El Salvador from IMF to support their economy in a post-pandemic scenario.

Adoption of Bitcoin as legal tender raises several macroeconomic, financial and legal issues that require very careful analysis…We are following developments closely, and we’ll continue our consultations with the authorities…Crypto assets can pose significant risks. Effective regulatory measures are very important when dealing with them.”, said Rice.

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