El Salvador’s president recently reiterated the World Bank, the Fed, and the IMF’s stand on the country’s Bitcoin adoption. Since the nation made Bitcoin legal tender in 2021, its government has attracted much criticism. Due to environmental and transparency concerns, the World Bank was against the nation’s stand. The IMF and the Fed have also taken a firm stand against the nation’s utilization of Bitcoin as a legal tender.
Bitcoin mining is energy-intensive, and every year, BTC miners utilize more electricity than many countries worldwide. With the world advocating for greener energy recently, the World Bank frowned against El Salvador’s decision.
Additionally, the World Bank stressed that cryptocurrencies’ anonymity would be a roadblock for the financial organization. Bitcoin users can own a wallet without passing through the regular KYC process. Hence, crypto users are guaranteed a higher level of privacy than normal. Considering this fact, the World Bank withdrew from offering El Salvador support in introducing Bitcoin to its economy.
Why El Salvador Adopted Bitcoin
El Salvador is one of the many nations that accept foreign remittances. Most individuals in the nation receive funds from family and friends living abroad. The nation’s economic data proved that millions of dollars were used as fees to convert foreign remittances. El Salvador’s president considered using Bitcoin as a legal tender to prevent the loss of tons of cash to conversion fees.
Bitcoin was created to serve as peer-to-peer cash in a decentralized ecosystem. As peer-to-peer money, users Bitcoin saves users the hefty fees intermediaries charge. In El Salvador’s case, Bitcoin was introduced to remove the exchange fees. So far, the leading cryptocurrency has been effective in playing this role. Further, Nayib Bukele has been firm in his decision to integrate Bitcoin into El Salvador’s economy. His firm stand comes amidst the World Bank, the IMF, and the Fed’s opposition.
Will the World Bank and the Fed Ever Make a U-Turn?
Admittedly, the crypto adoption trajectory is hardly ever a smooth ride for institutions. A few years ago, institutions like MicroStrategy antagonized Bitcoin. However, the tables have turned today. MicroStrategy is now one of the largest holders of BTC.
Similarly, JP Morgan took a firm stand against Bitcoin and cryptocurrencies for years. Currently, the investment bank has dropped its harsh tone, adding crypto products for specific users.
With the change in perspective of MicroStrategy and JP Morgan, the World Bank, IMF, and the Fed may eventually come to terms with crypto in the future. Perhaps that may only be achievable if Bitcoin miners utilize an alternative energy source.