Fitch Ratings warns El Salvador’s legislation of bitcoin (EXANTE: Bitcoin) as a legal tender might increase risks of violating international anti-money laundering (AML) and terrorist financing standards.
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According to a statement, the local regulators should bring more transparency to the cryptocurrency market. However, bitcoin's volatility volatility will likely challenge its use as a store of value and means of payment, the strategists added.
"During this ambitious timeframe, the country must create the regulatory framework pertaining to bitcoin, and finalize payment platforms and systems for the conversion of bitcoin to USD," Fitch Ratings added.
The analysts note that bitcoin’s lack of transparency could increase the risk of money laundering in case regulations fail to comply with Financial Action Task Force (FATF) standards. Moreover, the domestic banks could tighten due diligence due to risks associated with the cryptocurrency.
iHodl earlier reported that the authorities of El Salvador announced a new measure aimed at encouraging the adoption of the cryptocurrency. Adult users who download "Chivo," the official wallet developed by the government to transact with bitcoin, will receive a $30 airdrop in the cryptocurrency.
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