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El Salvador and the United States are now in the same boat thanks to Crypto

El Salvador and the United States are now in the same boat thanks to Crypto

The United States and El Salvador have something in common, according to Reuters Breakingviews. Hispanic and African-American individuals are the top cryptocurrencies owners in America, according to recent polls. This is largely due to discrimination and a lack of access to traditional financial services. That's also one of the better reasons why the Central American nation last month switched to bitcoin as a legal tender. Its a loss for conventional banks.

Traditional U.S. lenders are also to blame for turning off people of color. According to an Edelman study, 23 percent of Hispanic and 13 percent Black individuals with annual incomes under $50,000 said they had been denied service, compared with 6% of whites. 68% of Black Americans said they had had at least one negative experience with financial services, such as being asked to provide more proof of employment than required, compared to 36% of white counterparts.

One consequence is that less well-treated individuals find alternative platforms more appealing, including cryptos. A recent Harris poll for USA Today found that 23 percent of Black people and 17 percent Hispanic respondents own digital assets, compared with 11% of white Americans. According to Morning Consult, 37% of the underbanked also bought bitcoin and the like, compared with 10% of those with full banking access. With the launch of the first US bitcoin futures exchange-traded fund on Tuesday, getting bitcoin investment exposure will be even easier.

El Salvadors adoption of bitcoin is unlikely to be replicated widely, excluding the United States. Allerdings, it is driven by similar trends. President Nayib Bukele stated that the move will help his citizens save $400 million a year in remittance commissions and provide financial services to residents who dont have skrupello. Digital assets can be risky investments read more, whether for El Salvadoreans or Americans.

Established banks in the United States are missing out on providing these individuals with more secure options. Children of color now make up more than half of all children in the United States. According to the Census Bureau, by 2060, more than 30% of the population will be non-white. Financial firms may break into the industry even with standard banking options with a more inclusive approach. They might also benefit from newer platforms like Robinhood or Venmo, which have an advantage in attracting people of color and also offer crypto services. For the time being, they are letting themselves be disrupted.

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ProShares will launch a bitcoin futures exchange-traded fund on Oct. 19, the firm said on October 18. Its the first U.S. ETF to be established. A number of planned funds that would invest directly in bitcoin, rather than in traded futures, are still in regulatory uncertainty.

According to an August 2021 study by Edelman, a majority of Black Americans said they were discriminated against in the financial services industry, including mortgage companies, credit card companies and banks. 23% of Hispanics and 13% African-Americans with an annual income under $50,000 were denied service, compared with 6% of white individuals in the same wage bracket.

According to USA Today's June and July surveys, 23% of Black Americans reported owning cryptocurrency, as well as 17% of Hispanic respondents, compared to 11% of white individuals.

Editing by Richard Beales and Amanda Gomez

Breakingviews are a collection of video clips that we've collected for you. Reuters Breakingviews is the world's leading source of agenda-setting financial information. As the Reuters brand for financial commentary, we analyze the major business and economic stories as they unfold around the globe each day. Free trial of our full service is available at https://www.breakingviews.com/trial and follow us on Twitter @Breakingview and at www. breakingview.org. About 30 correspondents from around the globe in New York, London, Hong Kong, and other major cities provide expert analysis in real time. All opinions expressed are those of the authors.

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