El Salvador Bitcoin Law Has ‘Immediate Negative Implications,’ Credit Rating Agency Says

S&P Global said that the risks of the country’s decision to make bitcoin legal tender outweighs its potential benefits.

AccessTimeIconSep 16, 2021 at 11:09 p.m. UTC
Updated May 11, 2023 at 5:48 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

Credit rating agency S&P Global said El Salvador’s decision to adopt bitcoin as legal tender had “immediate, negative implications,” according to a report by Reuters on Thursday.

  • S&P said that bitcoin adoption could deter El Salvador from participating in an International Monetary Fund support program, increase financial weaknesses and impair banks by generating currency mismatches when they look to loan money, Reuters said.
  • “The risks” of El Salvador’s bitcoin adoption “seem to outweigh its potential benefits,” S&P said, according to the report. “There are immediate negative implications for (the) credit.”
  • The agency has given El Salvador a B- rating and a “stable” outlook.
  • Bitcoin became legal tender in El Salvador on Sept. 7 to great fanfare, but it has spurred protests among critics who say the law is not constitutional. The law was passed by a supermajority in El Salvador’s legislature on June 9.
  • In July, the ratings agency Moody’s downgraded El Salvador’s long-term, foreign-currency issuer and senior unsecured ratings from B3 to Caa1 and maintained a negative view of the country’s economy partly because of the government’s passage of the bitcoin law.
  • In a Thursday tweet, Coinbase co-founder and CEO Brian Armstrong noted that “crypto does not account for the majority of transactions in El Salvador yet” but called the country’s bitcoin adoption “steps in the right direction.”
  • 'The Voice' Makes Its Way to the Metaverse
    'The Voice' Makes Its Way to the Metaverse
  • Staking Has Been a Major Liquidity Sink for ETH: Coinbase Institutional
    Staking Has Been a Major Liquidity Sink for ETH: Coinbase Institutional
  • Fantom Token Jumps; Dolce & Gabbana Sued for NFT Deliveries
    Fantom Token Jumps; Dolce & Gabbana Sued for NFT Deliveries
  • What's the Key to Winning a Hackathon?
    What's the Key to Winning a Hackathon?
  • UPDATE (Sept. 17, 03:59 UTC): Adds information about Brian Armstrong tweet.


    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    James Rubin

    James Rubin was CoinDesk's U.S. news editor based on the West Coast.

    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.