Bank of Spain Criticizes El Salvador’s Bitcoin Adoption

The Bank of Spain, the country’s central bank, has questioned El Salvador’s adoption procedure for designating Bitcoin legal money last month. The bank explores various pain points the nation had while implementing its bitcoin policy in a study titled “The role of crypto assets as legal tender: the example of El Salvador,” and expresses concerns about how some measures were made with minimal openness.

El Salvador’s Bitcoin bet is being evaluated by the Bank of Spain.

The Bank of Spain has published a study that examines and reflects on El Salvador’s entry into the Bitcoin realm. According to Sergio Gorjón of the General Directorate of Operations, Markets, and Payment Systems’ study, “The Role of Crypto Assets as Legal Tender: The Example of El Salvador,” this was one of the first mistakes in the adoption of Bitcoin as legal tender.

The Bank of Spain is particularly concerned about the project’s relative lack of openness. According to the report:

“Another limiting factor was the opacity and lack of consensus with which the project was carried out. Thus, the main global rating agencies have agreed to downgrade El Salvador’s sovereign rating.”

Other issues have been discovered.

Other issues with El Salvador’s transition to Bitcoin were discovered by the Bank of Spain. The organization agreed with Vitalik Buterin, the co-founder of Ethereum, who argued that imposing Bitcoin on an untrained, crypto-illiterate public was dangerous. The Bank of Spain emphasized the following:

With just over 50% of its population with Internet access and a market share of smartphones that barely reaches 40%, El Salvador is at the bottom of the Central American countries in terms of the level of digital training.

The bank, on the other hand, complimented El Salvador for its efforts to address concerns about the use of bitcoin to fund terrorism or for money laundering. According to the bank, the country’s rules take these issues seriously and make it feasible to enhance risk-control procedures.

Patrick.