Bank of America, one of the largest financial institutions in the country by total assets, believes El Salvador could have a lot to gain from its recent foray into Bitcoin (BTC).
In a report released last week, analysts at the bank said El Salvador’s decision to accept BTC as legal tender could streamline remittances, promote financial digitization, give consumers greater choice, and open the country to American businesses and digital currency mines.
The bank found that remittances accounted for a staggering 24% of El Salvador’s gross domestic product, but a sizable chunk of that is accounted for by transaction fees.
“Using Bitcoin for transfers could potentially lower transaction costs compared to traditional transfer channels,” the report said, according to a picture from the government-sponsored Diario El Salvador. “The idea is that Bitcoin could be used as an intermediary for cross-border remittance, so that dollars are converted into Bitcoin by the sender and then converted back into dollars by the recipient domestically.”
#ElSalvador El Presidente @nayibbukele comparte esta mañana algunas de las oportunidades que @BankofAmerica ve en El Salvador, tras la adopción del #Bitcoin pic.twitter.com/08D1RuGFYI
– Diario El Salvador (@elsalvador) August 1, 2021
In June of this year, El Salvador became the first nation-state to accept Bitcoin as legal tender, marking an important milestone in the development of the digital currency from obscurity to mainstream acceptance. The decision to integrate BTC into the country’s financial system has met with criticism from the International Monetary Fund and the United Nations Economic Commission for Latin America and the Caribbean. Meanwhile, JPMorgan Chase believes El Salvador’s bitcoin gambit could put additional pressure on the network’s already limited ability to serve as a medium of exchange.
Related: In El Salvador’s Bitcoin Experiment: Cointelegraph Video Report
Survey data shows that half of Salvadorans are skeptical about using BTC as legal tender. Those who choose to adopt BTC for transactions can use the government-backed Chivo Bitcoin wallet, among many other options available.
Since El Salvador recognized Bitcoin as legal tender, several other Latin American nations have indicated they are pursuing their own cryptocurrency strategy. So far, however, no other country has followed in El Salvador’s footsteps.
Related: El Salvador will drop $ 30 in Bitcoin for every adult citizen