According to data from blockchain analysis company Chainalysis, Bitcoin remittances to El Salvador in May increased more than four times from the previous year. Last week, El Salvador passed a bill to make Bitcoin a legal tender in the country along with the U.S. dollar.
- Reuters quoted data from blockchain analysis company Chainalysis that the total monthly bitcoin transfers to El Salvador in May were less than US$1,000, totaling US$1.7 million, an increase of more than 300% from the previous year’s US$424,000. The monthly transfer of Bitcoin to the country reached a peak of 2.5 million U.S. dollars in March.
- Although remittances using bitcoin have skyrocketed, they still account for only a small portion of the total remittances to the country.According to data from the World Bank, the total remittances using traditional currencies in 2019 were close to US$6 billion. About 95% of the total remittances in the first quarter of this year came from Salvadorans working in the United States.
- El Salvador passed President Nayib Bukele’s Bitcoin Act last week, becoming the first country in the world to make Bitcoin a legal tender. The country is now focusing on mining Bitcoin using volcanic energy, with the goal of being “very cheap, 100% clean, 100% renewable” and “zero emissions.”
- Some organizations have expressed concern about El Salvador’s move to make Bitcoin legal tender, including the International Monetary Fund (IMF), which warned the country of legal and economic problems last week.
- The rating agency Moody’s stated last week that El Salvador’s Bitcoin law “brought risks to the stability of the financial system and the country’s monetary system, and indicated the lack of a coherent economic framework”.
- At the same time, an official at the Bank for International Settlements (BIS) called El Salvador’s Bitcoin law an “interesting experiment”, but said it did not change the bank’s attitude towards cryptocurrencies. The President of the European Central Bank (ECB) Christine Lagarde also stated that the policies of the European Central Bank are not affected by El Salvador’s Bitcoin law.
What do you think of the increase in Bitcoin remittances to El Salvador? Let us know in the comments section below.
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