JP Morgan is criticizing El Salvador’s decision to adopt Bitcoin (BTC) as a legal tender.
In a report titled “The Bitcoinization of El Salvador” shared by Documenting Bitcoin on Twitter, the banking giant says that the Central American nation’s recent embrace of Bitcoin is not motivated by stability concerns.
The bank adds that the move may jeopardize the outlook of El Salvador’s credit program with the International Monetary Fund (IMF), which recently warned nations that adopt Bitcoin as a legal tender raises economic and regulatory issues.
“It is difficult to see any tangible economic benefits associated with adopting Bitcoin as a second form of legal tender, and it may imperil negotiations with the IMF.”
The bank says that the impact of El Salvador’s crypto-related decision on its relationship with larger economies remains uncertain as the current governing tax, banking and financial laws and regulations existed long before the emergence of cryptocurrencies.
“Those moves may be complicated if this is the beginning of a broader trend among similarly situated, smaller nations.”
JP Morgan is commenting on El Salvador’s new Bitcoin Law as the bank also enters into the cryptocurrency market.
In April, the financial behemoth reported that it is planning to give its wealthy clients access to an actively managed Bitcoin fund. A filing with the U.S. Securities and Exchange Commission (SEC) in March also reveals that the bank is launching a structured note offering that allows investments in companies with exposure to digital assets.
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