JP Morgan, the American multinational investment bank reacted to the recent adoption of Bitcoin as a legal tender by El Salvador. The bank compared the Central American nation’s move to dollarization in early 2000 by various countries. It also said the move seems growth-oriented. The bank released a note titled, ‘The Bitcoinization of El Salvador’ said,
As with dollarization in the early-2000s, this move does not seem motivated by stability concerns, but rather is growth-oriented …
JP Morgan further added that they don’t see any tangible economic benefit from Bitcoin adoption in the short term. The bank also warned of possible mechanical implications in the banking and taxation system due to recent adoption.
International Monetary Fund (IMF) also raised concerns over El Salvador’s recent Bitcoin adoption just hours before its official meeting with the country’s president yesterday.
Is This the Begining of a Broader Trend Among Small Nations?
What seemed a mere meme among the crypto community just a few days back is now a reality. Many believe El Salvador would trigger a Bitcoin adoption trend among smaller nations and JP Morgan suspect the same, saying
such change in treatment would arguably be an unintended consequence of laws and regulations that significantly predate and understandably did not anticipate cryptocurrency…..but those moves may be complicated if this is the beginning of a broader trend among similarly situated, smaller nations
Niyab Bukele, the President of the Central American nation said their adoption of Bitcoin should not be seen as a gimmick and even announced they would promote 100% clean Bitcoin mining. Earlier today the Bukele announced Volcanic energy powered Bitcoin mining setup is being built showing how serious they are towards Bitcoin.