
“More than 70% of the adult population of El Salvador does not have a bank account,” reads the latest Global Research report from Bank of America. “For that reason, democratizing access to electronic payments, through Bitcoin, has a progressive touch.”
Bank of America, one of the nation’s largest financial institutions based on total assets, believes El Salvador could have a lot to gain with its latest foray into Bitcoin (BTC).
In a report published last week, analysts at the bank said El Salvador’s decision to recognize BTC as legal tender could streamline remittances, promote financial digitization, provide consumers with greater choice and open up the country to American firms and digital currency miners.
The bank noted that remittances account for a staggering 24% of El Salvador’s gross domestic product, but a sizable chunk of that goes toward transaction fees.
“Using Bitcoin for remittances could potentially reduce transaction costs compared to traditional remittance channels,” the report said, according to an image provided by state-backed Diario El Salvador. “The idea is that Bitcoin could be used as an intermediary for the cross-border transfer, so that dollars are converted to Bitcoin by the sender and then converted back to dollars domestically by the receiver.”
#ElSalvador El Presidente @nayibbukele comparte esta mañana algunas de las oportunidades que @BankofAmerica ve en El Salvador, tras la adopción del #Bitcoin pic.twitter.com/08D1RuGFYI
— Diario El Salvador (@elsalvador) August 1, 2021
In June of this year, El Salvador became the first nation-state to accept Bitcoin as legal tender, marking an important milestone in the digital currency’s evolution from obscurity to mainstream acceptance. The decision to integrate BTC into the country’s financial system has been met with criticism by the International Monetary Fund and the United Nations’ Economic Commission for Latin America and the Caribbean. Meanwhile, JPMorgan Chase believes El Salvador’s Bitcoin gambit could place additional pressure on the network’s already limited ability to serve as a medium of exchange.
Related: Inside El Salvador’s Bitcoin experiment: Cointelegraph video report
Survey data shows half of Salvadorians are skeptical about using BTC as legal tender. Those who choose to adopt BTC for transactions can use the state-backed Chivo Bitcoin wallet, among many other options available to them.
Since El Salvador recognized Bitcoin as legal tender, several other Latin American nations have hinted at pursuing a cryptocurrency strategy of their own. However, until now, no other country has followed in El Salvador’s footsteps.
Related: El Salvador to airdrop $30 in Bitcoin to every adult citizen
A new internal memo shows Bank of America Corporation is increasingly interested in the cryptocurrency industry. Candace Browning, head of global research at Bank of America, says in the memo that the bank is dedicating more resources to investigating cryptocurrencies and digital assets, reports Bloomberg. “Cryptocurrencies and digital assets constitute one of the fastest-growing emerging […]
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Candace Browning, the bank's head of global research, described cryptocurrency as "one of the fastest growing emerging technology ecosystems."
A new team at the second-largest bank in the United States will reportedly be devoted entirely to researching cryptocurrencies.
According to a Thursday Bloomberg report, Alkesh Shah from Bank of America’s data and innovation strategy group will be leading a team looking into digital assets. He along with Mamta Jain and Andrew Moss of Bank of America Merrill Lynch’s digital innovation group will be reporting to Michael Maras, who reportedly oversees global currencies and commodities research.
“Cryptocurrencies and digital assets constitute one of the fastest growing emerging technology ecosystems,” said Candace Browning, Bank of America’s head of global research. “We are uniquely positioned to provide thought leadership due to our strong industry research analysis, market-leading global payments platform and our blockchain expertise.”
Some Bank of America analysts have criticized cryptocurrencies like Bitcoin (BTC) for their volatility. When CEO Brian Moynihan testified before the U.S. Senate Banking Committee in May, he said: “We do not lend against cryptocurrencies and do not bank companies whose primary business is cryptocurrency or the facilitation of cryptocurrency trading and investment.”
Related: Bank of America claims it costs just $93 million to move Bitcoin’s price by 1%
However, the bank has taken some small steps seemingly towards adoption in recent months. In May, a report claimed that the bank had joined the Paxos Settlement Service, which would allow customers to use blockchain technology to settle stock trades.