US Senate new bill to ‘mitigate risks’ to States from El Salvador’s Bitcoin Law
A bipartisan group of senators in the US Senate have introduced legislation seeking to mitigate perceived risks that are posed by El Salvador’s Bitcoin adoption as a legal currency.
The proposed regulatory framework titled ‘Accountability for Cryptocurrency in El Salvador Act’ (ACES) aims at mitigating potential risks to the United States financial system, including money laundering and terrorism funding.
The bill had been introduced by Republican Senators Jim Risch and Bill Cassidy with support from Democratic Senator Bob Menendez.
Senator Risch announced on February 16 that El Salvador’s adoption of Bitcoin as legal tender had raised significant concerns regarding the economic stability as well as financial integrity of a vulnerable US trading partner in Central America.
Senator Cassidy has written that recognizing Bitcoin as an official currency by the Salvadorean government has opened the door for money laundering cartels and that it “undermines US interests.”
If the bill gets passed, it would give Federal agencies 60 days for submission of a report that assesses several aspects of El Salvador’s abilities about cybersecurity and financial stability.
The first part of the report is to assess how El Salvador had developed and enacted the Bitcoin Law, how the nation plans on mitigating the financial integrity and cyber security risks from virtual assets, whether or not it is able to meet Financial Action Task Force (FATF) requirements, Bitcoin legalization’s impact on individuals and businesses, and the overall effect cryptocurrencies would have on the economy of El Salvador.
The next part of the report would deal with describing El Salvador’s internet infrastructure and assessing the degree to which cryptocurrency usage has popularized, custody of funds and the potential for scams or hacks, and the rate of financial access that the underprivileged or unbanked El Salvadorans enjoy.
Once the above details are prepared, and the report is issued officially, based on its findings, the bill would stipulate action plans from various agencies.
In response to the ACES, El Salvador’s President Nayib Bukele has spoken out against the alleged interference in his country, tweeting that the US has “0 jurisdictions” on El Salvador’s sovereign and independent democracy and that the Salvadoreans “are not your colony, your back yard, or your front yard.”
El Salvador’s government had passed the Bitcoin Law in June 2021, making Bitcoin (BTC) a legal currency in the country and compelling businesses to accept it as a means of payment.
The Bitcoin law has already witnessed opposition from domestic lawmakers and the IMF, which has urged President Bukele several times to repeal the Bitcoin Law, most recently on January 25. However, the move has been praised by proponents of Bitcoin.