US Diplomat: This incident made authorities take ‘another tough look at bitcoin’

Many consider the market for the world’s largest cryptocurrency as a means to gain wealth. However, due to the attached risk factor, that is, its volatility it is perceived as an insecure investment option. This also highlights the importance of possessing a risk appetite to mitigate or absorb the losses. However, bitcoin has recently become more lucrative for countries and individuals equipped to manage the underlying risk.

In June 2021, El Salvador became the world’s first country to adopt bitcoin as legal tender, in accordance with the recently passed legislation that takes effect in September. Legalizing Bitcoin in a region shed light on one of the major criticisms against it, the lack of an independent macroeconomic institutional framework.

The same was the topic of discussion in a recent meeting between US and El Salvador government of officials.

The U.S. Under Secretary of State for Political Affairs, Victoria Nuland during an earlier interaction with the El Salvador President Nayib Bukele had discussed the country’s Bitcoin law. Referring to this discussion during the meeting with other El Salvador officials later, Nuland assured

them that and the President, had “talked about the implementation of Bitcoin as legal tender in the country.”

The senior US State Department official added:

“I did suggest to the president that whatever El Salvador chooses to do, you ensure that it is well regulated, that it is transparent and that it is responsible, and you protect yourself against malign actors.”

This development came soon after the Colonial Pipeline cyberattack that made the US authorities take “another tough look at bitcoin.” According to Nuland,

“The attack in May forced a temporary halt of operations at Colonial, which transports about 45 percent of the fuel consumed on the east coast of the United States. The company agreed to pay a ransom in bitcoin worth $4.4 million to the hackers.”

Recently, the International Monetary Fund mentioned that it was in talks with El Salvador concerning its position on Bitcoin and that it still had concerns regarding the same. Further, last month, the World Bank had rejected

a request from El Salvador for its assistance in implementation of their steps toward realizing the adoption of Bitcoin as official currency.