Bitcoin Adoption in El Salvador: Remittance Costs Key to Take-Up of Cryptocurrency, Development Bank Says

President Nayib Bukele has touted Bitcoin adoption as a way to facilitate remittance payments from Salvadorans living abroad.

Bitcoin Adoption in El Salvador: Remittance Costs Key to Take-Up of Cryptocurrency, Development Bank Says

A street vendor near cart with stickers which are part of campaign againstuse of Bitcoin as legal tender

Highlights
  • CABEI participated in a meeting of the Central American Monetary Council
  • The assistance is meant to help El Salvador navigate unexplored waters
  • Under 1 percent of volume of global crossborder remittances are in crypto
Advertisement

Central American countries are eagerly waiting to see if El Salvador's adoption of Bitcoin as parallel legal tender cuts the cost of remittances, an important source of income for millions of people, the region's development bank said.

President Nayib Bukele's congressional allies have already approved legislation giving the cryptocurrency official currency status alongside the US dollar, a first in the world. The move takes effect in September.

Bukele has touted Bitcoin adoption as a way to facilitate remittance payments from Salvadorans living abroad. Bitcoin price in India stood at Rs. 37.86 lakhs as of 1pm IST on August 25.

"Everyone is watching if it goes well for El Salvador and if, for example, the cost of remittances drops substantially ... other countries will probably seek that advantage and adopt it," Dante Mossi, the executive president of the Central American Bank for Economic Integration (CABEI), told Reuters.

Mossi called the plan an "out of this world experiment" geared at increasing financial inclusion in a region where many people lack access to bank accounts or credit cards, and rely on money sent home from relatives living in the United States.

CABEI, the regional development bank, is giving El Salvador technical assistance on implementing the cryptocurrency, an important show of support as the World Bank declined to help, citing environmental and transparency drawbacks.

Mossi said the Central American nations that receive the most remittances are those most likely to favour using Bitcoin and underscored that CABEI had a "fiduciary obligation" to support El Salvador in its request for help.

"Guatemala, Honduras, and El Salvador are the countries that would have the most to gain if the adoption of Bitcoin lowered the cost of sending remittances," said Mossi.

CABEI participated in a recent meeting of the Central American Monetary Council, part of the Central American Integration System (SICA), where participants asked about El Salvador's Bitcoin plans and showed interest, he added.

The Central Bank of Honduras referred Reuters to a June 11 statement which said the bank does not prohibit, supervise or guarantee the use of cryptocurrencies as methods of payment in the country.

The governments of Guatemala and Honduras did not immediately respond to a request for comment.

Under 1 percent of the volume of global crossborder remittances are currently in crypto, according to Autonomous Research, but in the future crypto is expected to account for a larger slice of the more than $500 billion (roughly Rs. 37,13,950 crores) in for annual global remittances.

Bitcoin offers, in theory, a quick and cheap way to send money across borders without relying on traditional channels.

CABEI's head of investments Carlos Sanchez said the bank's technical assistance is focused on helping El Salvador design a legal framework for the adoption of Bitcoin and to make sure strict international money laundering protocols are adhered to.

The assistance is meant to help El Salvador "navigate waters that have yet to be explored," said Sanchez.

© Thomson Reuters 2021


Are the Galaxy Z Fold 3 and Z Flip 3 still made for enthusiasts — or are they good enough for everyone? We discussed this on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.

Cryptocurrency Prices across Indian exchanges

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

OnePlus Nord 2 Getting New Green Woods Colour Variant, to Go on Sale on August 26 via Amazon
Share on Facebook Gadgets360 Twitter Share Tweet Snapchat Share Reddit Comment google-newsGoogle News

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2024. All rights reserved.
Trending Products »
Latest Tech News »