As revealed in a report on Friday, the law-making Bitcoin legal tender of El Salvador will mean that banks will be facing higher risks involving the violation of financial rules. The latest move will come into effect from September 7 and violation of rules is expected.
Fitch Says El Salvador Bitcoin Legal Tender Would Increase Operational and Financial Risks
Fitch addressed the chances of financial and operational risks and said:
“Would increase financial institutions’ regulatory, financial and operational risks, including the potential of violating international anti-money laundering and terrorist financing standards.”
In addition to this, Fitch mentioned the possibility of utilizing Bitcoin for all the commitment including bank loans could funnel Bitcoin traffic through the Central American country and added:
“may increase the risks that proceeds from illicit activities pass through the Salvadoran financial system.”
Nayib Bukele, the President of El Salvador said that the utilization of the flagship currency will be optional, which means anyone receiving a payment of BTC can choose to automatically convert those into US dollars.
New Regulations Should Comply With FATF
Provided the lack of transparency of Bitcoin, Fitch revealed that the regulations need to completely comply with the international standards set by the FATF. FATF stands for the Financial Action Task Force based in Paris.
Along with this, Bukele has cited the benefits of the flagship currency for global transfers which are a must in a country like El Salvador.
It is said because one-fifth of the gross domestic product in the year 2019 was associated with money sent back from the workers internationally in accordance with the World Bank.
Well, this is not news that people have raised concerns regarding the issues that the banks will face after the adoption of Bitcoin.
Bitcoin will bring money laundering and other financial issues with it and this fact can not be denied.
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