This came surprisingly for many, as the National Assembly issued a statement declaring that the digital currency stipulations would offer benefits to both the underbanked and the broader economy; however, banned decentralized currencies like Bitcoin. The legislators believe that electronic money will stimulate the economy.
They say that electronic money will make it possible to attract more Ecuadorian citizens, especially those who do not have checking or savings accounts and credit cards alone. However, they all looked in favor of only the electronic currency that is backed by the assets of the Central Bank of Ecuador and not the ones that are not backed by any government or agency.
Thus, the National Assembly of Ecuador effectively banning Bitcoin and other decentralized digital currencies, has though favored the technology driven financial transaction has tried to go against one of the greatest revolutionary inventions, Bitcoin. The amended law gives the government permission to make payments in electronic money.
However, it does not include decentralized digital currencies like Bitcoin and the amended law says that the proposed national digital currency is to be backed by the assets of the Banco Central del Ecuador, the nation’s central bank and if it is not, it will be banned. Interestingly, the beauty of Bitcoin is it is a decentralized currency which also is its USP.
The Move Is Being Criticized Heavily By the Local Bitcoin Community in Ecuador
The National Assembly has proposed that it will oversee the new currency while the central bank will develop and integrate it into the broader financial system. The law says that the currency will operate in tandem with the US dollar, Ecuador’s official currency which it adopted in 1999 after the great crash.
The move by the government has not been appreciated by the local Bitcoin community which says that it’s an attempt to undermine the decentralized currencies like Bitcoin that can challenge any fiat if the government tries to bring in. Also, the attempt to bring own digital currency is aimed to have control.
La Comunidad Bitcoin Ecuador, the country’s largest Bitcoin organization wrote an open letter to the legislators and requested that the government must allow for transparency and respect for the rights of consumers when creating a new digital currency.
The open letter says that Ecuador being a pioneer in the creation of a digital state-run currency must use methodologies that respect fundamental rights.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org