On 24 June, a Commentary from Fitch Ratings says that a new law that will formally designate Bitcoin as legal tender in El Salvador later this year is expected to increase the regulatory, financial and operational risks of banks there. The recently passed legislation will take effect on 7 September, making the nation the first in the world to adopt a cryptocurrency as legal tender. The measure is intended to establish a cheaper means to send remittances to the nation by circumventing the commission costs required by traditional financial institutions. The plan could ultimately attract foreign inflows of the cryptocurrency, which “may increase the risks that proceeds from illicit activities pass through the Salvadorean financial system”. One company has already announced plans to invest over $1 million to install some 1,500 cryptocurrency ATM in El Salvador, particularly in areas where residents receive remittances from abroad.
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