FOREX NEWS

HOMEFOREX NEWS

12-07-2021 | Business

El Salvador could face a ‘limitation' on the use of Bitcoin as a medium of exchange: JPMorgan.

JPMorgan, a global investment bank, says bitcoin's use in El Salvador's economy is facing headwinds, implying that its use as a medium of exchange may be limited.

JPMorgan claimed difficulties could occur because much bitcoin is held in illiquid businesses, with 90% of it not changing hands in over a year, according to a paper released on Thursday and cited by Bloomberg on Sunday.

The bank cites daily payment activity in the country as accounting for about 4% of recent on-chain transaction volume and more than 1% of the total value of tokens exchanged between wallets in the previous 12 months.

This is “potentially a substantial constraint on its viability as a medium of exchange,”  JPMorgan said.

On June 8, El Salvador's legislature voted and passed a Bitcoin Law, which would see the country formally recognise the cryptocurrency as legal tender on September 7.

Some detractors criticise President Nayib Bukele's decision to introduce the bill, while others claim it infringes their constitutional rights.

JPMorgan also mentioned a recent poll that found the majority of Salvadorans thought the new law was "not at all correct," and that 46% of those asked had no idea what bitcoin was.

While this could present issues, JPMorgan believes that, aside from the asset's illiquidity, the biggest worries about bitcoin's integration into the country's economy are its volatility and the demand imbalance between bitcoin and US dollars.

Conversions on the government platform, according to the bank, have the potential to "cannibalise onshore dollar liquidity," putting the balance of payments and fiscal stability at danger.

Leave a Comment :


CANCEL
  • We introduce people to the world of currency trading, and provide educational content to help them learn how to become profitable traders. We're also a community of traders that support each other on our daily trading journey.

OTHER LINKS

LEARN FOREX TRADING

CORPORATE ADDRESS

  • 8210 Desoto Dr, West Chester, OH - 45069, USA
  • (513) 968-7209
  • support@drforexofficial.com
Trustpilot

Trading CFDs on leverage involves significant risk of loss to your capital.

Any opinions, chats, messages, news, research, analyses, prices, or other information contained on this Website are provided as general market information for educational and entertainment purposes only, and do not constitute investment advice. The Website should not be relied upon as a substitute for extensive independent market research before making your actual trading decisions. Opinions, market data, recommendations or any other content is subject to change at any time without notice. DrForexOfficial, will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

The information on this site and the products and services offered are not intended for distribution to any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Read our full legal disclaimer.

© 2022 All Right Reserved. DrForexOfficial

We will provide you latest market updates and analysis, for that you can JOIN OUR TELEGRAM CHANNEL and get daily profit and more facilities. If you want to JOIN TELEGRAM CHANNEL, click here to join.