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

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.”

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.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

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.