Two United States Senators from opposing political parties have reintroduced legislation to mitigate the risks associated with El Salvador’s adoption of Bitcoin as legal money. The proposed law would force government authorities to report on El Salvador’s cybersecurity skills and financial stability and how they contributed to the country’s approval of the Bitcoin Act.
Idaho Senator James Risch presented the measure, titled Accountability for Cryptocurrencies in El Salvador Act, in February 2022. According to Risch, using cryptocurrencies as legal tender can “undermine economic and financial stability while empowering bad actors.” On May 11, he reintroduced the bill with New Jersey Senator Bob Menendez.
Bitcoin has been recognized as legal cash in El Salvador along with the national colon currency and the US dollar since September 2021. If the law is passed, it may have serious consequences for the country’s Bitcoin Law and financial stability.
In February, the International Monetary Fund warned the Central American country to assess the impact of Bitcoin as legal cash on the country’s financial integrity and stability. The final version of the Senate Bitcoin-focused bill passed by way of a committee in April 2022. The House of Representatives also introduced a similar bill, though it hasn’t advanced for more than a year.
El Salvador’s President Nayib Bukele has been a vocal supporter of Bitcoin, enacting pro-crypto laws and even proposing to raise funds to build ‘Bitcoin cities’ using BTC-backed bonds. Bukele blasted US senators on Twitter as “boomers” when the bill was introduced in February 2022, accusing them of disrupting a “sovereign and independent nation”.
The reappearance of the bill shows that the argument about using cryptocurrencies as legal cash is far from over. As more countries consider accepting cryptocurrencies, it is imperative to thoroughly investigate the possible harms and benefits of such a move.
Finally, the reintroduction of the Accountability for Cryptocurrencies in El Salvador Act emphasizes the ongoing debate about the impact adoption of cryptocurrencies has on a country’s financial stability and cybersecurity. With Bitcoin becoming legal cash in El Salvador and other countries considering similar measures, it is important to understand the risks and benefits of using cryptocurrencies as legal tender. If passed, the bill could have far-reaching consequences for El Salvador and its use of Bitcoin.