Cryptocurrencies as Legal Tender

Neither this post, nor any other post on cryptofal.com should be taken as financial advice. It is not.

Cryptocurrencies such as Bitcoin and Ethereum have had a massive impact on global financial markets. From cryptocurrency-oriented institutional solutions to cryptocurrencies being used as investment tools by retail traders, crypto has definitely disrupted the financial world.

One of the largest disruptions for this is cryptocurrencies being made legal tender in some countries. This has resulted in certain cryptocurrencies such as BTC having to be legally accepted as a means of payment. This is a controversial move that has incurred praise from the cryptocurrency community, but widespread condemnation from traditional financial institutions and governments.

One of the main reasons financial institutions and governments have condemned the idea of using cryptocurrencies as legal tender is volatility. From the US Government to the International Monetary Fund, they’ve all voiced opinions stating as to how this could result in widespread economic instability within those countries if/when they make certain cryptocurrencies legal tender.

Proponents of cryptocurrencies being used as legal tender believe it could provide developing nations with an opportunity to become part of a global economy that the traditional financial world left them out of. These proponents also hope that as cryptocurrencies become more widespread, the users in these developing nations will have access to a rapidly appreciating asset class.

From an objective standpoint, there are both legitimate concerns with making crypto legal tender. but there are also some potential benefits. The safest, and most effective answer likely falls somewhere in between the two.

This is an excerpt of a feature from our March 2022 Newsletter, which will be released next week.