Fitch Warns El Salvador's Bitcoin Adoption Will Be Negative for Insurers' Credit

The ratings agency warns there are additional regulatory and operating risks tied to the country adopting bitcoin as legal tender.

AccessTimeIconAug 16, 2021 at 5:15 p.m. UTC
Updated Sep 14, 2021 at 1:40 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

El Salvador's decision to adopt bitcoin as legal tender will likely be credit negative for local insurance companies with exposure to the cryptocurrency due to higher foreign exchange and earnings volatility risk, Fitch Ratings said on Monday in a press release.

  • El Salvador’s legislature voted and passed its Bitcoin Law on June 9 that will see the country formally adopting crypto as legal tender on Sept. 7.
  • Fitch Ratings warned there are “additional regulatory and operating risks” around  El Salvador adopting bitcoin as a legal tender, as bitcoin's practical implementation has yet to be defined by regulators worldwide.
  • The agency stressed that it does not expect bitcoin to be widely used by insurers to make claims or benefit payments, nor to offer policies denominated in the digital currency.
  • “The risks of using bitcoin largely relate to its rate of acceptance among policyholders. Insurers will likely convert bitcoin into USD as quickly as possible to limit exchange risks, if policyholders decide to use it to pay premiums,” said Fitch in the press release.
  • Currently El Salvador's insurance sector is exposed to low credit quality securities, mainly sovereign bonds (B-/Rating Outlook Negative).
  • Fitch said additional holdings of high-risk assets will only compound this risk.


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; 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.

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 to register and buy your pass now.