El Salvador recently dropped a “bombshell” decision that caught the world’s attention: Becoming the first-ever nation to make Bitcoin a legal tender.
As a follow-up for its groundbreaking decision, it will also “airdrop” (which means it will send free coins and tokens) worth $30 of Bitcoins to all of its registered citizens.
The government will soon release its official guidelines to the public regarding the use of Bitcoins as the country’s legal tender.
Risks on the Bitcoin adoption
Fitch Ratings, a New York-based economic analytics and rating agency, has warned El Salvador regarding its bold Bitcoin decision.
According to Fitch Ratings, there is a high possibility that the country could face major risks related to financial, operational, and regulatory aspects.
Another risk that Fitch sees is that El Salvador’s Bitcoin adoption could clash with the international standards on foiling terrorist financing and money laundering.
The agency also added that Bitcoin’s highly volatile nature would make it hard for the country to use it as a store of value and means of payment.
El Salvador could also possibly experience the volatility of the U.S. dollar’s value on its balance sheets if BTC assets/liabilities are not immediately converted into USD.
On top of these things, the agency included factors that could add to the country’s headache such as Internet access, financial inclusion, and implementation.
There is no turning back
Even with the possible risks involved in the decision, it is clear that El Salvador President Nayib Bukele has no plans to back down on the decision he himself has spearheaded.
He reminded everyone that once the law comes into force, no business establishments are allowed to refuse Bitcoin payments because of its official legal tender status.
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