Senate Proposal Raises Concerns About El Salvador’s Bitcoin Adoption

Senators in the United States presented legislation on Wednesday 16th February demanding the State Department to submit a report on El Salvador’s Bitcoin Law and devise a plan to “mitigate possible dangers to the United States’ financial system.”

Senate Proposal Raises Concerns About El Salvador's Bitcoin Adoption

Jim Risch (R-Idaho), Bob Menendez (D-N.J.), ranking member and chairman of the Senate Foreign Relations Committee, and Bill Cassidy (R-La.) sponsored the Accountability for Cryptocurrency in El Salvador (ACES) Act today (R-La.).

The senators’ bone of contention

The senators claim in a news release that El Salvador‘s Bitcoin Law “raises substantial concerns,” and that if the law passes, the State Department will have 60 days to prepare a report on the Central American country’s use of Bitcoin.

Bitcoin, the most valuable cryptocurrency by market capitalization, is legal cash in El Salvador, a small, impoverished Central American country. Nayib Bukele, the country’s quirky millennial president, sponsored the bill last year, and it was ratified in September.

Businesses that have the technological capability to accept Bitcoin as payment are required by law to do so. The government has even created a wallet called Chivo for residents to use, as well as providing them $30 worth of cryptocurrencies to get them started.

“The introduction of Bitcoin as legal cash in El Salvador raises major concerns about the economic stability and financial integrity of a vulnerable US trading partner in Central America,” Risch said in a statement released Wednesday. “This new strategy has the potential to undercut US sanctions policy, giving hostile actors like China and organized criminal organizations more leverage,” he added.

“Our bipartisan proposal wants more clarification on El Salvador’s policies and urges the administration to manage any financial system risk,” Risch added.

On Twitter, President Bukele referred to the MPs as “boomers.” He wrote, “We are not your colony, your back yard, or your front yard.” “Please don’t meddle in our domestic matters. Don’t waste your time trying to manage something you can’t.”

OK boomers…You have 0 jurisdiction on a sovereign and independent nation.We are not your colony, your back yard or your front yard.Stay out of our internal affairs.Don’t try to control something you can’t control 😉 — Nayib Bukele 🇸🇻 (@nayibbukele) February 16, 2022

Top bodies condeming El Salvador’s Bitcoin adoption

The World Bank, the IMF, and even JP Morgan have all condemned the Bitcoin Law. Last month, the International Monetary Fund (IMF) urged El Salvador to repeal the Bitcoin law.

Several times, citizens in the country have demonstrated against the law, as well as what they perceive to be an increasingly authoritarian administration (but according to polls, the president is still largely popular among residents).

President Nayib Bukele often tweets when he buys Bitcoin, claiming to do so while nude on his phone.

In November, Decrypt traveled to El Salvador, where it discovered that prominent retailers including McDonald‘s and Starbucks were taking the cryptocurrency, but that many regular folks were still unsure about it.