- US senators introduce the Accountability for Cryptocurrency in El Salvador (ACES) Act” to mitigate the risks of El Salvador’s “careless” Bitcoin decision.
- The ACT requires State Departments to produce a report on El Salvador’s adoption of Bitcoin within 60 days.
Last year, the president of El Salvador Nayib Bukele took a bold decision to make Bitcoin a legal tender in the country. This decision was heavily criticized as world financial institutions including the International Monetary Fund (IMF) raised concerns about the risk involved.
In February 2022, the U.S senators led by Jim Risch (R-Idaho), Bob Menendez (D-N.J.), ranking member and chairman of the Senate Foreign Relations Committee, and Bill Cassidy (R-La.) introduced the law “Accountability for Cryptocurrency in El Salvador (ACES) Act” requiring State Departments to produce a report on El Salvador’s adoption of Bitcoin in 60 days. Risch stated that El Salvador’s Bitcoin decision could weaken U.S sanctions and empower organized criminal Organizations.
El Salvador’s adoption of Bitcoin as legal tender raises significant concerns about the economic stability and financial integrity of a vulnerable U.S. trading partner in Central America.
Yesterday, the bill was introduced by Congresswoman Norma J. Torres (D-CA-35) and Congressman Rick Crawford (R-AR-01).
Bitcoin law of El Salvador could harm US national security – senators
According to Torres, the bill will protect the US financial system following numerous reports from global financial institutions concerning the threat that comes with EL Salvador’s Bitcoin law.
Global financial institutions have studied and detailed the numerous risks of El Salvador’s adoption of Bitcoin, and the international community acknowledges the potential danger. 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.
She further stated that the popularity of Bitcoin makes it necessary to consider reviewing regulations and consumer protections in which the US must be involved. Also, the decision is to make sure US national security is not harmed by El Salvador’s “careless gamble”.
It is our job as policymakers to better understand the potential effects of the adoption of Bitcoin as legal currency in El Salvador and what the U.S. can learn going forward.
As captured in the Bill, the State Department is required to analyze the adoption as well as “the risks for cybersecurity, economic stability, and democratic governance” in El Salvador. In addition, the department has been required to monitor its regulatory framework and the effect of Bitcoin adoption on businesses and its citizens.
The IMF earlier stated that El Salvador’s Bitcoin law is a huge risk to financial stability and consumer protection. The IMF has also pulled out from lending money to the Central American country, and this is said to be part of the reasons. Moody’s Sovereign Risk Group also disclosed that El Salvador may have lost about $22 million in the recent Bitcoin pullback.
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