Lawmakers Worry That El Salvador’s Bitcoin Stance Could Affect the U.S. Financial System

04/07/2022By: C, Fiona

U.S. Lawmakers Concern

U.S. lawmakers believe that countries that adopt bitcoin, such as El Salvador, may bring some risks to the United States. Since El Salvador uses bitcoin as legal tender, it has attracted the attention of other governments, including the United States, who believe that this decision may affect them. In a recent move, two members of the U.S. House of Representatives proposed a new bill to protect the U.S. financial system due to the adoption of bitcoin in El Salvador. It is worth noting that in September 2021, President nayib bukele of El Salvador officially announced bitcoin as the legal tender in the country.

Two lawmakers, Arkansas Senator Rick Crawford and California Senator Norma Torres, submitted the proposed legislation on the 4th. According to the press release, the bill is “El Salvador cryptocurrency accountability (ACES) act to reduce the risk of adopting bitcoin as legal tender in El Salvador to the United States”. The latest bill was accompanied by the initial bipartisan legislation introduced by the Senate in February.

The Senate bill requires the Secretary of state and heads of federal departments and agencies to submit a report within 60 days. The report is expected to mitigate any potential risks El Salvador may pose to the United States. U.S. lawmakers believe that countries like El Salvador that use bitcoin may bring some risks to the United States. In addition, the Senate bill also refers to countries that accept dollars. They include Zimbabwe, Palau, Micronesia, Ecuador, the Marshall Islands and East Timor.

US Lawmakers Proposed a Bill to “Mitigate” the Risks Posed by El Salvador’s Adoption of Bitcoin as Legal Tender

According to Torres, financial institutions around the world have studied and documented several risks associated with El Salvador’s decision on BTC. The Congresswoman added that the international community was also aware of the possible risks. In her statement, she mentioned that El Salvador was an “independent democracy” and that the United States government recognized its autonomy. However, Torres added that the United States needs a plan to protect its financial system from various risks. The politician pointed out that El Salvador’s bitcoin decision seemed to be a “careless gamble” rather than a philosophical innovation.

In addition, Congressman Crawford said that the increasingly popular cryptocurrency needs appropriate regulation and consumer protection.The International Monetary Fund (IMF) called El Salvador’s bitcoin decision a huge risk to financial stability. The IMF also expressed concern about consumer protection. Finally, due to El Salvador’s latest fiat currency, IMF did not provide loans to the country. Meanwhile, Moody’s sovereign risk group estimates that El Salvador may have lost as much as $22 million in the recent decline in the cryptocurrency market.