UN Commission issues new warning about the introduction of BTC in El Salvador

The Economic Commission for Latin America and the Caribbean (ECLAC), a United Nations regional commission to promote economic cooperation, is the latest regulator to raise concerns about El Salvador’s decision to accept Bitcoin (BTC) as legal tender.

ECLAC Executive Secretary Alicia Bárcena has warned that El Salvador’s Bitcoin switch carries a number of systemic risks, as well as risks related to money laundering, local news agency Diario El Mundo reported on Friday.

Bárcena stressed that there is still no research into the potential risks or benefits of El Salvador’s acceptance of BTC as legal tender. She expressed her confidence that El Salvador is likely to face scrutiny and risk by the Financial Action Task Force (FATF) regarding its decision to switch to Bitcoin.

The official added that Bitcoin fails to perform some of the basic functions of money and can be subject to extreme volatility that can create “a lot of systemic risk” in a dollarized economy.

Connected: Survey shows that most El Salvadorans are skeptical about making BTC bidding legal

With this warning, ECLAC joins a number of global bodies and organizations that are increasingly concerned about El Salvador’s decision to adopt BTC as legal tender after Salvadoran President Nayib Bukele announced the calendar law in early June, the first regulatory agencies to act alerted the matter and warned that the adoption of bitcoin as legal tender in the country could raise legal and financial concerns.

On June 17, the World Bank rejected El Salvador’s request for help in the country’s transition to Bitcoin adoption, citing issues related to environmental impact and transparency. Deputy Governor of Russia’s Central Bank Alexey Zabotkin also expressed concern today about El Salvador’s Bitcoin switch, arguing that large economies are unlikely to comply with the country’s call to legal tender BTC as this is a Financial risk represents stability.