El Salvador is making bitcoin legal currency along
El Salvador is making bitcoin legal currency along with US dollar, but facing pushback.
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  • El Salvador requested the World Bank's help in making bitcoin legal tender in the country.
  • But the international organisation swiftly rejected the plea, citing climate and crime concerns.
  • The Central American nation is the world's first to officially adopt the cryptocurrency.
  • For more stories go to www.BusinessInsider.co.za.

El Salvador has asked the World Bank for help implementing bitcoin as legal tender, only to be swiftly rejected, with the international organisation citing the cryptocurrency's climate impact and lack of transparency as the reason.

The Central American country became the first in the world to vote to make bitcoin legal tender last week.

On Wednesday, El Salvador's finance minister Alejandro Zelaya said the country had asked the World Bank for technical assistance in making the move become a reality.

Yet the international organisation - which provides financing and economic support to developing countries - quickly declined the request.

"While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings," a World Bank spokesperson said.

The World Bank is one of many institutions to highlight bitcoin's environmental impact. And its concerns about the cryptocurrency's transparency echo those of central banks and regulators around the world, who worry it is used for money laundering and drug crime.

The computing process that secures the network and creates new bitcoins is incredibly energy intensive, using as much energy each year as whole countries, according to research by Cambridge University.

El Salvador's request for help, and rejection, are signs that implementing bitcoin as a national tender may be more easily said than done. The government plans for bitcoin to be used for everyday payments and transactions alongside its current legal tender, the US dollar.

The International Monetary Fund last week said it has legal and economic concerns about the move. IMF spokesperson Gerry Rice told a press briefing: "Crypto assets can pose significant risks and effective regulatory measures are very important when dealing with them."

Nonetheless, El Salvador's decision boosted bitcoin, which had fallen as low $31,000 (R434,000) in early June. The cryptocurrency traded at $39,220 (R540,08) on Thursday, up around 1.8% for the day.

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