UN’s regional commission ECLAC has raised concerns over El Salvador’s Bitcoin legal tender, saying there may be different security risks attached to the use of Bitcoin.
The Economic Commission for Latin America and the Caribbean (ECLAC), a UN regional commission, has expressed reservations about El Salvador’s adoption of Bitcoin as a legal tender.
With this, ECLAC has joined a long list of organizations that have expressed reservations about El Salvador’s decision to make the use of decentralized currency legal in everyday life.
Alicia Bárcena Ibarra, ECLAC’s Executive Secretary, expressed concern about El Salvador’s decision during an online conference where she discussed the pandemic’s impact in Latin America.
ECLAC is waiting for El Salvador to implement the legal changes, according to Alicia Bárcena, but she also warned the country about the security risks that using Bitcoin as a legal tender could pose.
“many macroeconomic, financial and legal challenges, that the truth requires a much more careful analysis…there is no known technical study that can tell us about the risks or benefits that it could have for El Salvador.”, said Bárcena.
ECLAC is apprehensive of the response from the Financial Action Task Force (FATF), upon implementation of the law.
El Salvador is preparing for an unpleasant series of FATF investigation visits due to the increased risk of money laundering and several other data breaches.
“It is also clear that the country could face, when this law enters into force, the Financial Action Task Force (FATF), which is the world’s highest authority against money laundering and, well, those are some of the risks that are they can face,” Bárcena added.
El Salvador’s decision is opposed by a long list of powerful international organizations. The International Monetary Fund (IMF) recently issued a warning to the country about the wide range of legal and financial consequences that could result from making Bitcoin legal tender.
Several concerns of the IMF were expressed by Gerry Rice, the IMF’s spokesperson, during a press briefing, referring to Bitcoin and circling back to the approval of an emergency loan taken by El Salvador from the IMF to support their economy in a post-pandemic scenario.
“Adoption of Bitcoin as legal tender raises several macroeconomic, financial and legal issues that require very careful analysis…We are following developments closely, and we’ll continue our consultations with the authorities…Crypto assets can pose significant risks. Effective regulatory measures are very important when dealing with them.”, said Rice.
