The adoption of Bitcoin will bring four benefits to El Salvador, according to Bank of America. The US financial institution highlights the investment potential that the cryptocurrency will attract in the Central American country.
Bank of America recently said that adopting Bitcoin (BTC) as legal tender would give El Salvador several advantages. The US financial institution refers specifically to four benefits in a document that the president of the Central American country, Nayib Bukele, shared.
Bank of America believes that El Salvador will benefit from the pioneering cryptocurrency in terms of remittances. Besides, they mentioned financial digitization, more options for consumers, and the possibility of exploring new avenues of business with foreign companies.
In the document that Bukele posted on Twitter, Bank of America referred to the advantages of using Bitcoin for remittances. The institution explained that this could potentially reduce transaction costs in contrast to traditional remittance channels.
The financial entity recognizes that there is a high incidence of remittances from Salvadorans living abroad. Therefore, if using cryptocurrency can reduce costs, the recipients and senders of remittances would benefit.
By using the remittances in Bitcoin they receive from abroad, recipients could get a larger share for every US dollar. That would increase their available income and reduce the proportion of remittances lost due to financial intermediaries.
Regarding financial digitization, the text mentions the progressive element of democratizing digital payments with Bitcoin. That will be particularly relevant in a country where a vast majority of adults are unbanked.
On the other hand, Bank of America sees the adoption of Bitcoin as a way to give more choices to consumers. Likewise, they do not consider the legal obligation for businesses to accept cryptocurrency as coercive if they have the appropriate technological infrastructure. In that sense, they highlight the existence of the Chivo wallet, which the Salvadoran government created. Also, they said that the trade could convert BTC payments directly to US dollars.
The US bank also refers to the potential foreign investment that new industries associated with Bitcoin would bring. Such sectors would include cryptocurrency mining, payment gateways, and cryptocurrency ATM operators.
Bank of America Endorses Bitcoin After Criticizing It
The brief report from Bank of America is curious, as they referred to Bitcoin as impractical just a few months ago. They referred to the volatility of Bitcoin as a hindrance to using it as a store of value or means of payment. However, it seems that they are now supporting the use of the cryptocurrency.
Bank of America’s current position is in stark contrast to that of other reputable financial institutions. For example, JP Morgan stated in mid-July that the adoption of Bitcoin would cause problems for both El Salvador and the cryptocurrency.
It is not the first time renowned people and financial institutions have changed their opinion on the pioneering cryptocurrency. Many governments fear that Bitcoin contributes to illicit activities, so they have tightened regulations on its use. However, several studies have revealed that money laundering and terrorism financing cases are higher with fiat currencies.
By Alexander Salazar