World Bank Refuses To Help El Salvador With 'Bitcoin Transition'

The World Bank will not help El Salvador implement a transition to Bitcoin (CRYPTO: BTC) after the country moved to adopt the cryptocurrency as legal tender.

What Happened: According to a report from Reuters, the organization cited environmental and transparency issues with Bitcoin as the reasons for refusing to support the transition.

Salvadoran Finance Minister Alejandro Zelaya had reportedly sought “technical assistance” from the World Bank to use Bitcoin as a parallel legal tender alongside the U.S. dollar.

"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," said a spokesperson for the World Bank.

Why It Matters: After El Salvador’s move to accept Bitcoin as legal tender, a number of organizations expressed concerns over the viability of such a process, including the International Monetary Fund (IMF).

In a recent press conference, spokesperson Gerry Rice laid out the argument that El Salvador’s adoption of Bitcoin presented a number of financial, legal, and macroeconomic concerns that required very careful analysis.

Read also: El Salvador Plans To Mine Bitcoin Using Energy From Volcanoes

Reuters also reported that investors are now demanding higher premiums to hold Salvadoran debt, after concerns that its deal with the IMF, which is key to patching budget gaps, may now be in jeopardy.

"The recognition of a 'Bukele' risk premium has probably done some permanent damage to investor sentiment," said Siobhan Morden, head of Latin America fixed-income strategy at Amherst Pierpont Securities in New York, in a client note.

Price Action: At press time, Bitcoin was trading at $37,737, down 2.628% in the past 24-hours.

The leading crypto asset saw a 5% increase in daily trading volume, which stood at over $40 billion at the time of writing.