Fitch Ratings has become the latest global credit rating agency to warn El Salvador against adopting Bitcoin (BTC) as legal tender, expressing concerns that crypto assets could cause systemic risks for the Latin American nation.
Citing the country’s lack of clarity in Bitcoin’s implementation in mainstream markets, Fitch Ratings warned about the inherent volatility and operational risks for citizens associated with the crypto ecosystem. In addition, the agency pointed out El Salvador’s ongoing exposure to low credit quality securities, stating that “additional holdings of high-risk assets will only compound this risk.”
In early June, the Salvadoran Legislative Assembly passed President Nayib Bukele’s controversial “Bitcoin Law,” paving the way for BTC to be recognized as legal tender alongside United States dollars starting Sept. 7, 2021. As such, all Salvadoran businesses will be required to accept Bitcoin in exchange for goods or services.
Fitch predicts that…