Following the adoption of bitcoin as the country's second legal currency, the El Salvadoran government is discussing whether companies should pay their employees in bitcoin.
Major Updates
- El Salvador wants to pay salaries in Bitcoin just days after making it legal tender.
- Despite the fact that the country is making significant progress toward Bitcoin acceptance, JP Morgan believes it has no economic significance.
- El Salvador is also building volcanoes to mine Bitcoin
Using Bitcoin to pay employees
Three government departments were investigating the idea of company employees getting their salaries in BTC, according to a tweet by local radio station 107.7 Fuego on Tuesday (June 15, 2021). Rolando Castro, the Minister of Labor, disclosed this.
According to Castro, the decision to pay employees in bitcoin would be made once the currency's legal tender status is established. The Ministry of Labour is analyzing the judgment in collaboration with the Ministries of Economy and Finance.
As previously reported by CryptoPotato, a supermajority of El Salvador's Congress voted in support of President Nayib Bukele's bitcoin proposal. Following the news, Google searches for "El Salvador" hit an all-time high (ATH).
While the country's decision to accept bitcoin has been lauded by BTC fans and the crypto community, the move has sparked anxiety, particularly among global financial institutions.
Despite criticism, El Salvador is pressing forward with its bitcoin aspirations. The Central American Bank for Economic Integration (CABEI) recently stated that it will provide technical support to the El Salvadoran government in the adoption of Bitcoin as legal currency. The government also intends to mine bitcoin using volcanic energy.
JP Morgan's Opinions on Bictoin Acceptance in El Salvador
JPMorgan said in a recent investor letter, as tweeted by Financial Times reporter Robin Wigglesworth, that El Salvador's recent decision to make bitcoin legal currency was growth-oriented. However, the American investment bank seemed to suggest that the country's choice had little economic advantage, and that it might impede its talks with the International Monetary Fund (IMF)
According to a JPMorgan statement:
“It is difficult to envision any real economic advantages connected with adopting bitcoin as a secondary form of legal currency, and it may jeopardize IMF negotiations.”
Indeed, the IMF commented on El Salvador's plan to legalize bitcoin, with Gery Rice, the IMF's spokesman, saying that the country's choice raised economic and legal issues. Rice claims that:
“The use of bitcoin as legal currency presents a variety of macroeconomic, financial, and legal problems that must be thoroughly examined. We are carefully monitoring events and will continue to engage with authorities.”
Following a supermajority vote by the nation's Congress, El Salvador became the first nation to declare bitcoin legal currency alongside the dollar. President Nayib Bukele has said that the government would provide citizenship to people who invest in the country's economy using bitcoin. Bukele has revealed intentions to harness electricity from its volcanoes for bitcoin mining.
Conclusion
It is unclear if the country's acceptance of Bitcoin as legal currency would supplement or replace current legislation. According to President Nayib Bukele's proposed legislation, "tax contributions may be made in Bitcoin" and "the USD would be utilized as the reference currency for accounting reasons."
Question of the day
Would you like your government to pay salaries in Bitcoin?
