In the early summer of this year, the El Salvadorian authorities adopted a law recognizing bitcoin as a legal tender in the country. Such a step by the Latin American state drew criticism from both international organizations and the public of El Salvador.
During the last week, Moody's expectedly downgraded the country's investment attractiveness rating due to the recognition of the legal status of BTC.
The agency said in a statement Friday that the long-term rating has been downgraded from B3 to Caa1.
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Moody's analysts have joined the critics of the financial policy of the Latin American state. They also highlighted: "The Bitcoin law and other measures speak of weakening governance in El Salvador, heightened tensions with foreign partners including the United States, and the threat of disruption to negotiations with the IMF (International Monetary Fund)."
Moody's press office also added that the legalization of cryptocurrency is going to make it difficult for El Salvador to enter external capital markets. New loans will be needed to pay off obligations to investors.