Two members of the House of Representatives have introduced legislation aimed at mitigating the risks to the United States financial system due to El Salvador adopting Bitcoin (BTC) as legal currency.
In a Monday announcement, California Representative Norma Torres and Arkansas Representative Rick Crawford proposed legislation that would direct the State Department to create a plan to mitigate the potential risks to the U.S. financial system based on an analysis of the risks to El Salvador’s “cybersecurity, economic stability and democratic governance” following the country’s recognition of Bitcoin (BTC) as legal tender in September 2021. The Accountability for Cryptocurrency in El Salvador Act is a companion bill to bipartisan legislation introduced in the Senate in February.
The Senate bill aimed to have the Secretary of State as well as federal department and agency heads report to Congress within 60 days on a plan to “mitigate any potential risk to the United States financial system posed by the adoption of a cryptocurrency as legal tender” in El Salvador and other countries that accept the U.S. dollar — seemingly including Ecuador, Micronesia, Palau, East Timor, Zimbabwe and the Marshall Islands. Torres cited the International Monetary Fund’s reports that the use of Bitcoin as legal tender carried “large risks” related to financial stability, financial integrity and consumer protection.
“El Salvador is an independent democracy and we respect its right to self-govern, but the United States must have a plan in place to protect our financial systems from the risks of this decision, which appears to be a careless gamble rather than a thoughtful embrace of innovation,” said Torres.
Today, I introduced the Accountability for Cryptocurrency in El Salvador Act with @RepRickCrawford. El Salvador’s adoption of #Bitcoin is not a thoughtful embrace of innovation, but a careless gamble that is destabilizing the country. https://t.co/Ag9K8fyHMbpic.twitter.com/4N8DN7895w
— Rep. Norma Torres (@NormaJTorres) April 5, 2022
Idaho Senator James Risch, the sponsor of the Senate bill, said in February that El Salvador’s adoption of BTC as legal tender raised “significant concerns about the economic stability and financial integrity of a vulnerable U.S. trading partner in Central America.” Louisiana Senator Bill Cassidy, one of the co-sponsors, claimed that the country’s Bitcoin Law could “[open] the door for money laundering cartels” and threaten the U.S. dollar’s dominance as the global reserve currency.
In March, the bill passed the Foreign Relations Committee and may be headed to a full Senate vote. El Salvador President Nayib Bukele reacted to the introduction of legislation in February by urging the United States to “stay out” of the country’s internal affairs and to the bill moving forward the following month by claiming “the U.S. Government DOES NOT stand for freedom.”
Never in my wildest dreams would I have thought that the US Government would be afraid of what we are doing here. pic.twitter.com/QgJPa70mn0
— Nayib Bukele (@nayibbukele) March 23, 2022
Since El Salvador’s Bitcoin Law went into effect, Bukele has used his Twitter account to announce several BTC buys, totaling 1,801 BTC as of January — worth roughly $83 million at the time of publication. In addition, the Salvadoran government said on March 23 that it would postpone issuing BTC-backed bonds aimed at funding its Bitcoin City project.