US lawmakers are introducing a “risk mitigation” companion bill to El Salvador’s bitcoin law

Two members of the House of Representatives have introduced legislation aimed at mitigating the risks to the United States’ financial system posed by El Salvador’s adoption of Bitcoin (BTC) as its legal currency.

In an announcement Monday, California Representative Norma Torres and Arkansas Representative Rick Crawford proposed legislation that would direct the State Department to draft a plan to mitigate potential risks to the U.S. financial system based on an analysis of risks to El Salvador’s “cybersecurity, economy to create stability and democratic governance” following the country’s recognition of Bitcoin (BTC) as legal tender in September 2021. The Accountability for Cryptocurrency in El Salvador Act is a companion law to bipartisan legislation passed in February was introduced in the Senate.

The Senate bill was designed to require the Secretary of State and heads of federal departments and agencies to report to Congress within 60 days on a plan to “mitigate any potential risk to the financial system of the United States resulting from the introduction of a Cryptocurrency as legal tender emerges”. in El Salvador and other countries that accept the US dollar – including apparently Ecuador, Micronesia, Palau, East Timor, Zimbabwe and the Marshall Islands. Torres cited the International Monetary Fund’s reports that using bitcoin as legal tender poses “major risks” to financial stability, financial integrity and consumer protection.

“El Salvador is an independent democracy and we respect its right to self-government, but the United States must have a plan to protect our financial systems from the risks of this decision, which seems like a reckless gamble rather than a thoughtful embrace of innovation.” ‘ Torres said.

Today I presented the Accountability for Cryptocurrency in El Salvador Act with @RepRickCrawford. #Bitcoin adoption in El Salvador is not a thoughtful embrace of innovation, but a careless venture that is destabilizing the country. https://t.co/Ag9K8fyHMb pic.twitter.com/4N8DN7895w

— Representative Norma Torres (@NormaJTorres) April 5, 2022

Idaho Senator James Risch, the proponent of the Senate bill, said in February that El Salvador’s adoption of BTC as legal tender raises “significant concerns about the economic stability and financial integrity of a vulnerable U.S. trading partner in Central America.” Louisiana Senator Bill Cassidy, one of the co-sponsors, claimed that the country’s bitcoin law “[open] the gateway for money laundering cartels” and threaten the dominance of the US dollar as the global reserve currency.

In March, the bill passed the Foreign Relations Committee and could go to a full Senate vote. El Salvador President Nayib Bukele responded to the introduction of the law in February by urging the United States to “stay out” of the country’s internal affairs and to the law, which will be pushed forward the following month, by asking asserted, “The US government does NOT stand for liberty.”

Never in my wildest dreams did I think the US government would be afraid of what we are doing here. pic.twitter.com/QgJPa70mn0

— Nayib Bukele (@nayibbukele) March 23, 2022

Related: El Salvador: How it started vs. how it went with the Bitcoin Act in 2021

Since El Salvador’s bitcoin law went into effect, Bukele has used his Twitter account to announce multiple BTC purchases, totaling 1,801 BTC in January — worth about $83 million at the time of publication. Additionally, on March 23, the Salvadorian government said it would delay issuing BTC-backed bonds to fund its Bitcoin City project.

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