Bank of America sees advantages in introducing Bitcoin as legal tender in El Salvador – Featured Bitcoin News

Bank of America has highlighted some of the benefits of introducing Bitcoin as legal tender in El Salvador. Opportunities include low-cost remittances, the digitization of the financial world, more choice and larger investments by foreign companies.

Bank of America highlights opportunities Bitcoin is bringing to El Salvador as legal tender

Bank of America (BOA) in a report released last week highlighted some potential benefits in El Salvador of introducing Bitcoin as legal tender.

The analysts, including Latin American strategist Claudio Irigoyen, said: “The market has been overly pessimistic and overlooks any argument in favor of it, although admittedly these benefits are more uncertain.”

The report initially contains the following details:

Bitcoin could be used as an intermediary for cross-border transfers … Using Bitcoin for transfers could potentially lower transaction costs compared to traditional transfer channels.

Bank of America analysts also noted that Bitcoin’s volatility could be reduced if the BTC to dollar conversions were “automatic”.

Financial intermediaries would receive fewer transfer fees, so recipients would have more disposable income. However, Bank of America warned, “It is unclear how Bitcoin transaction fees would differ compared to traditional wire transfer channels.”

Second, the Bank of America report describes that “financial digitization” could be another benefit as “more than 70% of the adult population in El Salvador have no bank account”. The analysts emphasized: “The democratization of access to electronic payments through Bitcoin has a progressive touch”.

Additionally, the introduction of Bitcoin as legal tender “gives consumers more choice,” noted Bank of America analysts, citing:

We reject the notion that it is imperative that companies are legally obliged to accept Bitcoin as a means of payment as long as they have the appropriate technological infrastructure in place.

They went on to explain that payments can be automatically converted into dollars using the government’s electronic wallet, Chivo.

Finally, the report said that the introduction of Bitcoin could attract foreign direct investment (FDI) to El Salvador, from, say, Strike, Bitcoin miners, and ATM manufacturers. At least two crypto ATM companies have already announced plans to install cryptocurrency ATMs in El Salvador: Chainbytes and Athena Bitcoin.

While Bank of America sees some benefits, it believes that the adoption of Bitcoin as legal tender in El Salvador is negative overall, largely due to the high volatility of the cryptocurrency. The analysts said that making people with a highly volatile asset pay taxes is particularly worrying, warning that it could result in a sharp drop in revenue if the price falls.

What do you think of Bank of America’s view of Bitcoin as legal tender in El Salvador? Let us know in the comment section below.

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