Senate Proposal Raises Concern Over El Salvador’s Bitcoin Adoption

February 16, 2022 9:21 pm

Three US senators just introduced a new bill that focuses on the recent decision by El Salvador to adopt Bitcoin as legal tender within the nation.

Senators Jim Risch, Bob Menendez, and Bill Cassidy’s introduced the bill which is named the “Accountability for Cryptocurrency in El Salvador (ACES) Act” which essentially requires the State Department to report on any risks that the country’s crypto adoption could have to the US financial system.

The main reasons for concerns that have been mentioned so far is that this could open up opportunities for money laundering and would oppose US financial interests.

As a result, the group of senators are pushing for something to be done as it is apparently a critical issue that would weaken the status of fiat currency like the dollar.

CoinDesk reports:

“El Salvador recognizing Bitcoin (BTC) as official currency opens the door for money laundering cartels and undermines U.S. interests,” said Bill Cassidy (R-La.).
“If the United States wishes to combat money laundering and preserve the role of the dollar as a reserve currency of the world, we must tackle this issue head on.”
If passed, the bill would require the State Department to report on a laundry list of subjects with respect to El Salvador and Bitcoin, including the flow of remittances from the U.S. to El Salvador, bilateral and international efforts to combat transnational illicit activities, and the potential for reduced use by El Salvador of the greenback.
As for the details on what the report by the State department would actually report on, it has been revealed that it would include a thorough examination on how the new Bitcoin adoption is affecting citizens and businesses.
Additionally, it would document the exact process the country is using to legally make Bitcoin tender, how often the citizens are actually using crypto, and if the nation is able to handle any cyber security risks.
More importantly, there is the concern within the report that analyzes how this new law would affect El Salvador’s use of the USD and if it would reduce the usage.
This is not the first time that an entity outside the country of El Salvador decided to criticize the country’s decision as the IMF had recently made similar comments.
CryptoNews.net reports:

The report would also investigate matters such as “El Salvador’s bilateral economic and commercial relationship with the United States and the potential for reduced use by El Salvador of the United States dollar,” its relationships with organizations like the International Monetary Fund (IMF) and World Bank and any possibility of using cryptocurrency to circumvent U.S. sanctions.

“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,” Risch said in a press statement.

“This new policy has the potential to weaken U.S. sanctions policy, empowering malign actors like China and organized criminal organizations.

Our bipartisan legislation seeks greater clarity on El Salvador’s policy and requires the administration to mitigate potential risk to the U.S. financial system.”

El Salvador’s president, Nayib Bukele, responded back to the criticisms saying that other foreign parties should stay out of the country’s internal affairs and that others have no jurisdiction over what the country should do or not do.

As the crypto adoption process continues, many other nations are keeping a close eye out on what happens as this could be the first of many to come.

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