El Salvador’s Adoption of Bitcoin as Legal Tender Addressed in Congressional ACES Act
Two members of Congress introduced the Accountability for Cryptocurrency in El Salvador (ACES) Act to lower potential risks to the U.S. that could arise from El Salvador’s adoption of bitcoin as legal tender.
Rep. Norma J. Torres, D-Calif., chair of the Central America Caucus, and Rep. Rick Crawford, R-Ark., ranking member of the House Permanent Select Committee on Intelligence’s Subcommittee on Counterterrorism, Counterintelligence, and Counterproliferation, want to explore potential risks and develop a plan to protect the country.
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“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 said in a press release.
“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,” Torres said.
The proposed legislation asks the state department to conduct an analysis of El Salvador’s adoption of bitcoin as well as outline the risks as far as cybersecurity, economic stability and democratic governance in El Salvador. The bill also asks for a plan to reduce risk to the U.S. financial system.
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“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,” Crawford said.
“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,” he added.
The International Monetary Fund (IMF) cited El Salvador’s decision to use bitcoin as legal tender as having inherent risks to financial stability and consumer protection. It was the central reason that the IMF decided not to loan money to the country.
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El Salvador may have lost an estimated $22 million during a single recent dip in the cryptocurrency market, according to Moody’s Sovereign Risk Group.
The Torres and Crawford bill was introduced as companion legislation to a Senate bill introduced last month by U.S. Senators Jim Risch, R-Idaho, Bob Menendez, D-N.J., and Bill Cassidy, R-La.