US lawmakers introduce companion bill to ‘mitigate risks’ from El Salvador’s Bitcoin Law

Two members of Congress have introduced legislation to mitigate the financial risks to the United States from El Salvador’s adoption of Bitcoin (BTC).

On Monday, Norma Torres, a California Representative, and Rick Crawford, an Arkansas Representative, announced legislation that would direct State Department to develop a plan to reduce the risk to the U.S. financial sector. This plan was based on an assessment of the potential risks to El Salvador’s cybersecurity, economic stability, and democratic governance following the recognition of Bitcoin (BTC), as legal tender in September 2021. The companion bill to the bipartisan legislation in the Senate introduced in February is called “Accountability for Cryptocurrency In El Salvador Act”.

The Senate bill required that the Secretary of State, as well as the heads of federal departments and agencies, report to Congress within 60 Days on a plan to “mitigate all potential risks to the United States financial systems posed by the adoption a cryptocurrency as a legal tender” in El Salvador. This would include other countries that accept the U.S. dollars, such as Palau, East Timor and Zimbabwe. Torres referenced reports by the International Monetary Fund that Bitcoin’s use as legal tender posed “large risks” to financial stability, financial integrity, and consumer protection.

Torres stated that El Salvador is an independent democracy. We respect its right of self-government. However, the United States must have a plan to protect their financial systems from the risk of this decision. This seems more like a reckless gamble than a thoughtful embrace for innovation.

Today, @RepRickCrawford and I introduced the Accountability for Cryptocurrency in El Salvador Act. The adoption of #Bitcoin by El Salvador is not an intentional embrace of innovation but a reckless gamble that is threatening the country.
— Rep. Norma Torres, @NormaJTorres, April 5, 2022

Idaho Senator James Risch was the sponsor of the Senate bill. In February, he stated that El Salvador’s adoption as legal tender of Bitcoin raised “significant concerns about economic stability and financial integrity” of “vulnerable U.S. trading partners in Central America.” Louisiana Senator Bill Cassidy claimed that the country’s Bitcoin Law could “[open]… the door for money laundering cartels” as well as threaten the U.S. dollar’s dominance as the global reserve currencies.

The bill passed the Foreign Relations Committee in March and could be heading to a full Senate vote. Nayib Bukele, El Salvador’s President, reacted to February’s introduction of legislation by asking the United States to “stay away” from the country’s internal affairs. The bill was then moved forward by the United States in March. He claimed that the “U.S. Government DOES not stand for freedom.”

Never would I have imagined that the US Government would be so afraid of what is happening here.
— Nayib Bukele (@nayibbukele) March 23, 2022

Related: El Salvador: How it began vs. what it turned out with the Bitcoin Law 2021

Bukele announced several BTC purchases on Twitter since El Salvador’s Bitcoin Law was implemented. The total of 1,801 BTC purchased as of January is approximately $83 million. On March 23, the Salvadoran government announced that it would delay issuing BTC-backed bonds to finance its Bitcoin City project.