The Economic Commission for Latin America and the Caribbean, or ECLAC, a United Nations regional commission to encourage economic cooperation, is the latest regulator to raise concerns about El Salvador’s decision to authorize bitcoin as an optional legal tender in the country. ECLAC executive secretary Alicia Bárcena has warned that El Salvador’s move into bitcoin poses many systemic risks as well as risks related to money laundering.
“El Salvador is likely to face scrutiny and risks from the Financial Action Task Force.”
ECLAC executive further emphasized that there is no study yet that would have examined any potential risks or benefits of El Salvador accepting BTC as legal tender. She expressed confidence that the Central American country is likely to face scrutiny and risks from the Financial Action Task Force, or FATF, regarding its decision to move into Bitcoin. The official added that Bitcoin does not fulfill some basic functions of money and is subject to extreme volatility, which could pose “multiple systemic risks” in a dollarized economy.
El Salvador continues to face criticism from financial regulators.
ECLAC has joined a growing number of global authorities and organizations getting increasingly concerned about El Salvador’s decision to adopt bitcoin as legal tender after Salvadorian president Nayib Bukele announced historic legislation in early June. The International Monetary Fund was one of the first regulators to subsequently call attention to the matter, warning that accepting Bitcoin as legal tender in the country could pose legal and financial concerns. Earlier, the World Bank refused El Salvador’s request for help on the country’s transition to adopting Bitcoin, citing issues related to Bitcoin’s alleged environmental impact and transparency.