El Salvador, on Wednesday, became the first country to embrace Bitcoin as legal tender. Many Bitcoin enthusiasts have applauded the decision, but a recent report by JP Morgan has raised questions over the move.
The report titled “Bitcoinization of El-Salvador” sees no substantial economic benefits of adopting Bitcoin. The investment bank believes that the move is growth-oriented, comparing it with the country’s adoption of the Dollar in the 2000s.
The report also makes a note of El-Salvador’s pending Billion-dollar loan negotiations with the IMF. The international body has already raised concerns over the country’s move, and the report notes that it may derail negotiations.
However, the report does concede that El Salvador may have set the tone for more similar decisions from other smaller countries.
The report also questioned how bigger economies would treat El Salvador’s Bitcoin acceptance. Larger economies will have to treat this move under their tax laws, banking, and other financial institutions.
This can be a complicated process since many of these laws and regulations were adopted before cryptocurrencies. El Salvador’s parliament passed the bill just a few days ago, resulting in a 5% increase in Bitcoin’s value at the time.
The country’s president also addressed environmental concerns related to Bitcoin mining. He pledged to use cheap, clean, and renewable energy from volcanoes instead of electricity.