Two US Senators from different political parties have reintroduced a legislation aimed at addressing the perceived risks of El Salvador’s Bitcoin adoption as a legal tender. Idaho Senator James Risch and New Jersey Senator Bob Menendez have filed a bill that requires reports on the adoption of cryptocurrency in the Spanish-speaking country. This new bill is an updated version of the Accountability for Cryptocurrency in El Salvador Act presented in 2022 as a response to El Salvador’s Bitcoin Law enactment.
Bitcoin Adoption in El Salvador Poses Risks According to US Senators
According to a report by the Washington Examiner, Senators Risch and Menendez have reintroduced a bill aimed at mitigating potential risks associated with El Salvador’s adoption of Bitcoin as legal tender. The Senators are concerned that the crypto’s adoption in the country could have negative consequences on economic and financial stability. They are also concerned about its likely uses in illicit activities.
It should be noted that El Salvador made history by becoming the first nation to adopt Bitcoin as legal tender, alongside the US dollar, in September 2021.
Bill Requires Reports on El Salvador’s Cybersecurity and Financial Stability Following BitCoin Adoption
If the bill does come to fruition, US federal agencies would be required to produce reports on El Salvador’s financial stability and cybersecurity capacities, and evaluate how these could have influenced the approval of Bitcoin as legal tender. The International Monetary Fund (IMF) already cautioned El Salvador to carefully consider the probable impact of the nationwide adoption of Bitcoin on the country’s financial stability and integrity back in February of this year but it seems its leadership is keen on continuing its current stance on the digital asset.
Previous Version of the Bill
The previous version of the bill introduced in the Senate passed through a committee in April 2022. However, lawmakers in the House of Representatives also introduced a companion bill, but it has not moved in more than a year. The Senators are reintroducing the bill to urge Congress to pass the legislation to mitigate the risks of Bitcoin adoption in El Salvador.
El Salvador’s President Criticizes US Lawmakers’ Interference
El Salvador’s President Nayib Bukele has directly attacked US lawmakers on Twitter in the past, calling them “boomers” and accusing them of interfering with “a sovereign and independent nation” when the bill was first introduced. His administration has implemented several pro-crypto policies, including plans to raise funds to construct a Bitcoin city using BTC-backed bonds.
So far, El Salvador’s adoption of Bitcoin as a legal tender remains a topic of debate and scrutiny among policymakers and economists worldwide. The impact of the proposed bill on its economy and political relations with the US remains to be seen, as the legislation has yet to be passed.
If it does, then, it will likely result in increased scrutiny of El Salvador’s financial and cybersecurity capabilities, which may lead to diplomatic tensions between the two countries because it is seen as a form of US interference with the Central American nation’s sovereignty.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager of a consultancy firm.