Bitcoin’s legal tender status in El Salvador could lead to sanctions, says top economist-here’s why

Steve Hanke, a professor of Applied Economics at Johns Hopkins University, says Salvador’s endorsement of bitcoin as legal tender puts the country at risk of sanctions.

Hanke, executive director of the Troubled Currencies Project at the Cato Institute in Washington, D.C., said the move to El Salvador, the world’s leading crypto site, would be flagged for violating standards set by the financial activities task force, a group of seven (G7) countries. That could lead to sanctions, Hanke said.

“When the flag appears … you’ll get sanctions. And we don’t know what the sanctions will be. But there could also be sanctions.

Like relaxation and sanctions… this significantly limits financial activity in financial transactions and can shift from light compression to hard compression.”

In a new interview with kitco News, the applied economist explains that almost half of the violations identified by the financial effectiveness task force will be related to Bitcoin as legal tender in El Salvador.

“…Of the 58 bad actions pursued by the financial activities Task Force, 27 are likely to be infringed with bitcoin. Under El Salvador’s proposed Bitcoin law, which is due to take effect on September 7, it is almost impossible to come clean.”

Hanke also says that President Salvador Nayib Bukele’s move of 4.5 million BTC citizens to each of the Central American countries, worth $ 30, also raises questions.

“[Bukele] desperately wants this Bitcoin to be won, and Article 7 of the law [which requires traders to accept bitcoin] is the”mandatory bidding” law.  This allows traders to accept whether they want it or not.

So, for some reason, he’s very keen to use people and subsidise people. And so you have to ask why.”


Don’t miss a hit-sign up to receive crypto-related email alerts.

Join the Discussion

  • BrokerEUR/USD
    FX Pro 0.91pips. (variable) margin: 3.33%
    OANDA 1.3pips (variable) margin: 3.33%
  • Back to top