Top Credit Agencies Warns Against El Salvador Adopting Bitcoin as Legal Tender

El Salvador’s bitcoin tender legislation, implementation in 21 days. After the Bitcoin bill in the nation, passed by the supermajority of the Salvadoran Congress on June 9.

Since then, several views have emerged concerning the country’s choice to adopt Bitcoin. From organizations such as the Bank of America, the International Monetary Fund (IMF), the Bank for International Settlements (BIS) members, and individuals such as Christine Lagarde, the President of the European Central Bank (ECB).

The major credit rating agency, Fitch Ratings, released a report mentioning the reason it believes the adoption of Bitcoin may be risky. Fitch does not consider Bitcoin (BTC), extensively utilized in the insurance industry.

Moreover, there are other members of the Big Three rating agencies who aren’t happy. With El Salvador’s decision to adopt Bitcoin as legal currency, including Fitch Ratings. Moody’s downgraded rating on El Salvador and bitcoin law are both partly responsible at the end of June.

The Need to Adopt New Standards

The report says:

“The ability of insurers to minimize their holding period will depend on whether the regulatory and operational framework allows for bitcoin to be immediately converted to USD, which is not clear at this time.”

Furthermore, Fitch concludes that he hopes Bitcoin to “absorb new IT” in specific business areas. Such as auditors, insurance companies, and others. If Bitcoin gets accepted, these kinds of economic sectors must leverage costs. Specifically for the infrastructure of digital currency systems.

Such expenses may include adopting new internal technological standards, enhancing safety and anti-fraud procedures. Moreover, the training for administrators of cryptocurrency.

In a previous note, Fitch warned that with the introduction of Bitcoin, the fiscal imbalance in the nation is not helpful. Along with increased IMF worries.