U.S. Reps. Norma Torres (D-CA) and Rick Crawford (R-AR) introduced legislation designed to mitigate the risks to the United States of El Salvador’s adoption of Bitcoin as legal currency.
Their bill, the Accountability for Cryptocurrency in El Salvador (ACES) Act, directs the State Department to produce an analysis of El Salvador’s adoption of Bitcoin as legal tender and the risks for cybersecurity, economic stability, and democratic governance in El Salvador. Further, it calls on the State Department to create a plan to mitigate potential risks to the U.S. financial system.
“Global financial institutions have studied and detailed the numerous risks of El Salvador’s adoption of Bitcoin, and the international community acknowledges the potential danger,” Torres, chair of the House Central America Caucus, said. “El Salvador is an independent democracy, and we respect its right to self-govern, but the United States must have a plan in place to protect our financial systems from the risks of this decision, which appears to be a careless gamble rather than a thoughtful embrace of innovation.”
El Salvador’s choice to adopt Bitcoin as legal tender was cited by the International Monetary Fund (IMF) as a significant risk to financial stability and consumer protection. It was a major reason why the IMF refrained from lending to El Salvador. Moody’s Sovereign Risk Group estimates El Salvador may have lost as much as $22 million alone during one recent dip in the cryptocurrency market.
“The rise in popularity of cryptocurrencies such as Bitcoin creates questions and a necessary review of regulation and consumer protection which the U.S. federal government should be involved in. El Salvador’s hasty decision to adopt Bitcoin as legal tender causes concern for the stability of the U.S.-Salvadorian economic relationship. It is our job as policymakers to better understand the potential effects of the adoption of Bitcoin as legal currency in El Salvador and what the U.S. can learn going forward,” said Crawford, the ranking member of the House Permanent Select Committee on Intelligence’s Subcommittee on Counterterrorism, Counterintelligence, and Counterproliferation.
A companion bill was introduced in the Senate in March by U.S. Sens. Jim Risch (R-ID), Bob Menendez (D-NJ), and Bill Cassidy (R-LA).