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The Malaysian government has said that it does not have any plans to adopt the use of cryptocurrencies as legal tender. The deputy finance minister in the country has shut down the recent rumours that the country could adopt the primary cryptocurrency as legal tender to be used in buying goods and services.
El Salvador is currently the only country that has adopted Bitcoin as legal tender. The country passed a Bitcoin law in September last year, making it a requirement for businesses to accept Bitcoin as a means of payment.
Malaysia will not adopt Bitcoin as legal tender
A report published earlier this week noted that the Deputy Minister of the Communication Ministry in Malaysia wanted the country to follow the footsteps taken by El Salvador and adopt Bitcoin as legal tender.
At the time, Bloomberg reported that the politician said, “We hope the government can allow this. We are trying to see how we can legalize this so that we can develop youth participation in crypto and assist them.”
However, the Deputy Finance Minister of Malaysia, Mohd Shahar Abdullah, has refuted claims that the use of Bitcoin and other private cryptocurrencies will be legalized in the country. Abdullah noted that Malaysia was currently focused on issuing a central bank digital currency (CBDC).
“Cryptocurrencies like Bitcoin are not suitable for use as a payment instrument due to various limitations,” the official said. However, Abdullah did not mention the limitations hindering the country from adopting and legalizing Bitcoin.
The official was vehement to state that Malaysia was taking another route towards digitizing its economy.
The growing technology and payment landscape have prompted the Bank Negara Malaysia to actively assess the potential of bank’s digital currency central (or CBDC).
Adoption of Bitcoin as legal tender
After El Salvador adopted Bitcoin as legal tender, it received much praise from the cryptocurrency community. The country launched the Chivo wallet to facilitate BTC transactions. El Salvador bought Bitcoin when the prices were above $50,000, but given the recession that crypto prices have witnessed lately, the Bitcoin holding of the country is negative.
When El Salvador announced its adoption of Bitcoin as legal tender, it received heavy criticism from international financial institutions such as the World Bank and the International Monetary Fund (IMF). These institutions stated that adopting Bitcoin as legal tender was risky to financial stability, given that the prices of this cryptocurrency were volatile.
While countries have been hesitant to adopt Bitcoin as legal tender, the race towards creating central bank digital currencies (CBDCs) has been witnessed. CBDCs are cryptocurrencies created and controlled by governments and their central banks. CBDCs are alternatives to fiat currencies.
China is currently leading the race for CBDC development among developed countries. Last year, China banned the use of private cryptocurrencies. Some members of the crypto community noted that this ban could have been made to promote the use of the digital yuan. The digital yuan is currently in a testing phase, and it has attracted millions of Chinese users.
Other developed economies have also been studying the launch of a CBDC. The US government recently tasked all federal agencies to assess the feasibility of a digital dollar. The UK and European counteri8es are also in the research phase for a CBDC.
It remains to be seen whether other countries will follow El Salvador’s footsteps and adopt Bitcoin use. However, this might not happen now, given the poor performance of Bitcoin and the entire crypto sector since the beginning of the year. Bitcoin is currently 36.5% below its all-time high.
To learn more visit our Investing in Bitcoin guide.
Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.