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However, the President of the Central American country responded to the legislation by saying that the U.S. should stop interfering in its internal affairs.
Senators Jim Risch (R-Idaho), a ranking member of the Senate Foreign Relations Committee, Bob Menendez (D-N.J.), chairman of the same committee, and Bill Cassidy (R-LA.), jointly proposed the bipartisan bill. The legislation is called Accountability for Cryptocurrency in El Salvador (ACES).
If the bill is enacted, the Secretary of State has sixty days to submit a report on the analysis of El Salvador’s adoption of Bitcoin as a legal tender.
Part of the report will examine the process used by the Central American country to legalize BTC, El Salvador's regulatory framework for making BTC legal tender, and the country’s technical ability to mitigate the financial integrity and cyber security risks associated with digital currencies.
The State Department report also would assess the impact of El Salvador’s BTC adoption on businesses and individuals, on the unbanked population, on the country’s macroeconomic stability and public finances, and also on relations with the International Monetary Fund (IMF) and the World Bank.
Furthermore, the report is expected to come up with “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 using the U.S. dollar as a legal tender.
In addition, the State Department will assess the possibility of using crypto to circumvent U.S. sanctions.
These U.S. Senators believe the bill and the ensuing report is necessary to tackle issues like money-laundering using Bitcoin while also safeguarding the U.S. financial system.
According to a statement from Senator Cassidy:
“El Salvador recognizing Bitcoin as official currency opens the door for money laundering cartels and undermines U.S. interests. 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.”
Senator Risch also said:
The proposal comes less than a month after the IMF suggested that the El Salvador government drop Bitcoin as a legal tender.
However, El Salvador President Nayib Bukele did not take lightly to the ACES act, stating that the United States had no jurisdiction over an independent country. Bukele further warned the U.S. to stay away from El Salvador's internal affairs.
According to a tweet by the President:
Ever since implementing the Bitcoin Law in September 2021, the Bukele-led government, which has enjoyed praise from Bitcoin proponents, has also come under criticism both from within and outside the country.
Nevertheless, El Salvador’s President seems undeterred and has continued to accumulate BTC.
Should this legislation pass, the United States will likely glean more information from El Salvador’s adoption of BTC as legal tender, but it may come at the cost of good relations with the Central American country.