Legislation to reduce risks from El Salvador’s Bitcoin Law

Two House members have submitted legislation aimed at reducing the dangers to the US financial system as a result of El Salvador’s adoption of Bitcoin (BTC) as a legal tender.

Legislation’s companion bill

Representatives Norma Torres of California and Rick Crawford of Arkansas introduced legislation on Monday that would require the State Department to develop a plan to mitigate potential risks to the US financial system based on an analysis of the risks to El Salvador’s “cybersecurity, economic stability, and democratic governance” following the country’s recognition of Bitcoin (BTC) as legal tender in September 2021.

The El Salvador Accountability for Cryptocurrency Act is a companion bill to bipartisan legislation submitted in Senate in the February.

According to the Senate bill, the Secretary of State and the heads of government departments and agencies must present a strategy to Congress within 60 days to “mitigate” the risk of terrorism.

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 that accept the dollar, such as Ecuador, Micronesia, Palau, East Timor, Zimbabwe, and the Marshall Islands.

According to studies from the International Monetary Fund, using Bitcoin as legal cash poses “significant dangers” to financial stability, financial integrity, and consumer protection.

One of the bill’s co-sponsors, Louisiana Senator Bill Cassidy, stated that the country’s Bitcoin Law might “[open] the door for money laundering cartels” and risk the dollar’s position as the world’s reserve currency.

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What’s next?

The bill passed the Foreign Relations Committee in March and might now be considered for a full Senate vote. El Salvador’s President, Nayib Bukele, responded to the bill’s introduction in February by encouraging the US to “keep out” of the country’s domestic affairs and, upon the bill’s passage the following month, declaring that “the United States Government DOES NOT STAND FOR FREEDOM.”

Bukele has used his Twitter account to announce many BTC purchases after El Salvador’s Bitcoin Law went into force, accumulating 1,801 BTC as of January – valued at nearly $83 million at the time of publication.

Furthermore, on March 23, the Salvadoran government announced that it will postpone the issuance of Bitcoin-backed bonds to fund its Bitcoin City initiative.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing