Fitch Ratings researchers said that the initiative to introduce bitcoin as a means of payment in El Salvador will increase financial, operational and regulatory risks for banks. The President of El Salvador, Nayib Bukele, recently announced that BTC will be recognized as a legal means of payment in the country from September 7. Fitch, one of the big Three rating agencies, warned that El Salvador’s decision to make bitcoin legal tender will put banks at risk of money laundering, terrorist financing and tax evasion.
However, the World Bank, the IMF and other major organizations were critical of this step. For example, the World Bank refused to help El Salvador integrate bitcoin into the financial system.
Fitch analysts warned in a blog post that bitcoin could potentially violate international anti-money laundering (AML) and terrorist financing standards, as well as contribute to tax evasion. Fitch says that El Salvador has not yet published a detailed guide on the regulation of cryptocurrencies, and notes an “ambitious timeframe” for creating a legal framework and launching payment systems.
If El Salvador does not comply with the standards of the Financial Action Task Force on Money Laundering (FATF), “correspondent banks of El Salvador may need a more detailed comprehensive audit of the country’s financial institutions.” Analysts also predict that companies and citizens will most likely not rush to make payments in BTC.
“The actual speed of adoption may be low, given the problems with implementation, as well as the low level of access to financial services and the Internet in the country,” Fitch says.