Bitcoin democratizes access to electronic payments, potentially benefiting 70% of El Salvador’s unbanked adult population
A Bank of America (BofA) report highlighted several potential benefits from El Salvador’s recognition of Bitcoin as legal tender. Published last week, the report outlines key areas where Bitcoin adoption could have meaningful impact.
According to BofA analysts, recognizing BTC aims to streamline the country’s remittance sector, which accounts for nearly 25% of El Salvador’s GDP. Using Bitcoin could reduce the fees typically charged through traditional remittance channels.
Bitcoin could act as an intermediary for cross-border transfers, allowing Salvadorans to save even when converting received BTC into dollars. The report suggests that increased remittance flows and lower transaction fees could significantly raise households’ disposable income.
Another important benefit is the financial freedom Bitcoin could offer to roughly 70% of the country’s unbanked population. Financial digitization is identified as a major advantage of the cryptocurrency, particularly for people who cannot open bank accounts.
The bank also notes that Bitcoin adoption will give consumers more choice. “We do not agree with the view that businesses should be legally required to accept Bitcoin as a form of payment,” the report says, adding that merchants and consumers will be free to choose between accepting cryptocurrency or using dollars directly via their “Chivo” wallets.
Bank of America further suggests that El Salvador’s position as a national aggregator of Bitcoin could bring additional benefits. Analysts point out that this is especially true for attracting foreign direct investment tied to the development of bitcoin mining operations.
The report is notable given BofA’s previously critical stance toward Bitcoin. In a March report the bank described BTC as hiding “ugly secrets” and characterized it mainly as an instrument for speculative trading. The latest analysis appears against the backdrop of recent criticism from the IMF and the Economic Commission for Latin America and the Caribbean.