Flashback with Bitcoin in El Salvador? : Experts warn that this is a dangerous measure for the stability of the country

A group of experts from El Salvador are calling for a review of its government’s decision to adopt Bitcoin as legal tender for the country.

In a statement released on June 25, a group of Salvadoran academics and researchers called for the repeal of the so-called “Bitcoin Law” considering that this cryptocurrency does not perform the basic functions of currency due to its high volatility.

The Bitcoin law, sanctioned on June 9, made El Salvador the world’s most important cryptocurrency legal tender, which has generated controversy and conflicting opinions from Salvadorans and the rest of the world.

The statement, supported by more than 80 professionals, was posted on Twitter by a Salvadoran economist who works in economics at the Central American Institute for Fiscal Studies (ICEFI). It is Ricardo Castaneda Ancheta, who, along with the other names listed in the statement, have expressed their reasons for being against the Bitcoin law.

In the letter, a series of observations were made that question the new law. They stated that The guarantee of the convertibility of Bitcoin will be financed by the collection of taxes and that the government should not assume this risk, due to fluctuations in the price of cryptocurrencies. They thus refer to the trust fund of 150 million dollars that will be administered by the Development Bank, which was recently announced by the President of El Salvador, Here to watch.

Experts in the crypto world support the idea of ​​adopting cryptocurrencies in countries, but more specifically in the so-called stable coins or stable cryptocurrencies, which for the most part track the value of the dollar. “What’s interesting is that the Fed governor, Lael Brainard, then the president, Jerome Powell, they started to talk about “stable coins”. Too Eric Rosengren (Chairman of the Boston Federal Reserve). It’s an escalation, ”he said. Caitlin long, Founder and CEO of Avanti Financial in Wyoming.

Those who oppose this law the most are, in turn, the opponents of Bukele. In general, professionals in El Salvador who support the declaration they believe that using cryptocurrency as legal tender, in a dollarized economy like El Salvador, could create problems.

In addition, they warn of the environmental risks of turning the country into a center of cryptocurrency mining, although this statement has sparked controversy, since the project proposes the use of renewable energies for this purpose.

The signatories support a well-known idea that Cryptocurrencies, because they are unregulated, lead to illegal acts such as tax evasion, among other crimes. For this reason, they have expressed concern that the country will become a tax haven or a money laundering center through the adoption of the most important cryptocurrency.

In addition, They mentioned positions against Bitcoin taken by some Nobel Laureates in Economics and researchers internationally and cited the Bank for International Settlements (BIS) who has repeatedly expressed his rejection of cryptocurrencies, calling for the creation of digital currencies by central banks.

On this basis, professionals they want to prevent a “bitcoinization” of the economy, arguing that the Central Reserve Bank will not be able to track transactions on the blockchain. As a result, they invite the country’s professionals to join the list of signatories calling for the repeal of the Bitcoin law.

Johns Hopkins University expert, Steve Hanke, fervent advocate of dollarization, has previously warned that Bitcoin could “completely collapse the economy” of El Salvador. Like most opponents of cryptocurrencies, he argued that Bitcoin has “a fundamental value of zero”. This is because there is no way to find the intrinsic value of a crypto asset.

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