On Tuesday, a group of US senators filed legislation aimed at allowing El Salvador to use bitcoin as legal cash.
El Salvador’s Bitcoin Activities
Ranking member Jim Risch (R-Idaho) and committee chairman Bob Menendez (D-N.J.), as well as Bill Cassidy (R-La. ), are members of the Senate Foreign Relations Committee (R-La. ), sponsored the Accountability for Cryptocurrency in El Salvador (ACES) Act (R-La.). If passed, the bill would require the State Department to produce a report on El Salvador’s bitcoin activities, as well as a strategy to manage any vulnerabilities to the US financial system.
The bill reads as follows: Not later than 90 days after the submission of the report required by subsection 19 (a), the Secretary of State, in coordination with the heads of other relevant Federal departments and agencies, shall submit to the appropriate congressional committees a plan to mitigate any potential risk to the US financial system posed by the adoption of a cryptocurrency as legal tender in El Salvador; and any other country that uses the US dollar as legal tender.
The State Department report would contain a number of crucial details on El Salvador’s efforts to make bitcoin legal tender, as well as an analysis of how the law affects its citizens and businesses.
The report would, for example, detail the steps El Salvador took to design and adopt its bitcoin law, as well as the extent to which its residents use cryptocurrencies and the country’s technological ability to deal with cybersecurity threats. It would also include information on El Salvador’s unbanked population and remittance flows from the United States. The report would also look into El Salvador’s bilateral economic and commercial relationship with the United States and the potential for reduced use of the United States dollar by El Salvador, as well as its relationships with organisations like the International Monetary Fund (IMF) and World Bank, as well as the possibility of using cryptocurrency to avoid US sanctions.
El Salvador Proclaimed Bitcoin Legal Money
The introduction of Bitcoin as legal cash in El Salvador raises serious 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 doctrine has the potential to erode US sanctions policy, favouring hostile actors such as China and organised crime groups. Our bipartisan bill wants more clarity on El Salvador’s policies and urges the administration to manage potential financial system risk. El Salvador’s president, Nayib Bukele, issued an English-language tweet in response to the news. Following the ratification of a law in the country’s national assembly earlier this year, El Salvador proclaimed bitcoin legal money on September 7, 2021, alongside the US dollar.