It was just the beginning of June when El Salvador announced the legalization of Bitcoin (BTC) and other cryptocurrencies within its jurisdiction. Since then, the regulatory authorities from all over the world seem to be in an unrest situation due to El Salvador’s recent decision.
Initially, it was the IMF that raised its concerns over El Salvador’s adoption of cryptocurrencies and Bitcoin. This time it is the Economic Commission for Latin America and the Caribbean (ECLAC) that has shared its concerns over El Salvador’s acceptance of crypto as legal entities.
The ECLAC is the regional committee of the United Nations for encouraging economic cooperation. The ECLAC has shared its concerns over the risks and functional issues that El Salvador has bestowed upon itself with the adoption of Bitcoin (BTC) and altcoins.
It was Alicia Barcena, the executive secretary at ECLAC who shared her concerns over the adoption of BTC and altcoins by El Salvador in terms of global financial issues. She shared her concerns over the usage of Bitcoin and altcoins in El Salvador that may pose a huge risk for the country’s regulatory foothold.
At present, governments from all over the world are concerned about the usage of cryptocurrencies for money laundering. She stated that despite cryptocurrencies being banned in several countries or having no legal status, the money laundering activities from such areas are enormous.
Now that cryptocurrencies have legal status in El Salvador, this could pose a huge risk for the entire world in terms of money laundering. By accepting cryptocurrencies as a legal tender, El Salvador has made a move that was not well-calculated.
Barcena argued that El Salvador did not even do any investigation around the benefits and risks involved in dealing with cryptocurrencies. The government and regulatory authorities of El Salvador must have carried out an investigation around cryptocurrencies before adding them to legal tender.
She predicted that this miscalculation from El Salvador’s end could lead to huge consequences that the country may end up facing. This is because cryptocurrencies are becoming riskier and riskier with every passing day.
While the regulatory authorities from all over the world are scrutinizing cryptocurrencies and crypto-related firms, El Salvador has taken a completely opposite direction. This may result in El Salvador facing a lot of risks and scrutiny from the global regulatory authorities.
Barcena predicted that the El Salvador regulatory authorities may end up getting questioned by the Financial Action Task Force (FATF) due to the inclusion of altcoins and Bitcoin.
Barcena stated the same thing most of the regulatory authorities have been saying from all over the world. As per her, Bitcoin is highly volatile and fails to fulfill the requirement of being money. Therefore, it is extremely risky to invest in an asset that has no physical value.