A bipartisan group of senators has introduced legislation in the U.S. Senate aimed at mitigating the risks posed by the adoption of bitcoin as legal tender in El Salvador.
The proposed El Salvador Cryptocurrency Accountability Act (ACES) aims to “mitigate potential risks to the U.S. financial system,” such as money laundering and terrorist funding.
The bill was introduced by Republican Senators Jim Risch and Bill Cassidy and signed by Democratic Senator Bob Menendez. Senator Risch wrote in a February 16 proclamation:
“El Salvador’s adoption of Bitcoin as legal tender raises major concerns about the economic stability and financial integrity of the vulnerable U.S. trading partner in Central America.”
Senator Cassidy wrote, “Recognition of Bitcoin as an official currency opens the door to money laundering and harms the interests of the United States.”
If passed, the bill would give federal agencies 60 days to submit a report assessing several aspects of the Central American nation's capabilities in terms of cybersecurity and financial stability.
The first part of the report will assess how El Salvador develops and enacts Bitcoin laws, how El Salvador will "mitigate the financial integrity and cybersecurity risks of virtual assets," comply with Financial Action Task Force (FATF) requirements, and impact on individuals and businesses , and the impact of encryption on its economy.
The next section of the report will describe El Salvador’s internet infrastructure and assess the “level of cryptocurrency use” there, the potential for escrow and hacking of funds, and the rate of access to financial services by disadvantaged or unbanked Salvadorans.
Following the release of these reports, the bill will prescribe action plans for agencies based on the findings.
El Salvador's President Nayib Bukele reacted to the interference in his country, tweeting: "You have 0 jurisdiction over a sovereign and independent country. We are not your colony, not your backyard, nor Not your front yard."
The government of El Salvador passed the bitcoin law in June 2021. This has made bitcoin (BTC) a legal tender in the country, forcing businesses to accept it as a form of payment.
The Bitcoin law has faced some opposition from domestic lawmakers and the International Monetary Fund, who have repeatedly urged President Bukele to repeal the Bitcoin law, most recently on Jan. 25. Of course, it has been praised by supporters of the world's largest cryptocurrency by market cap.
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