US Lawmakers Raise Red Flags About El Salvador’s Bitcoin Adoption - Tokenhell

The legislatures in the United States have recently expressed their concerns regarding Bitcoin adoption in El Salvador. It is worth noting that El Salvador is a Latin American nation that has adopted Bitcoin as a legal tender.

The lawmakers in the USA have demanded a risk report from the country concerning the impact of Bitcoin adoption on economic cooperation and legal correspondence between these nations.

The Senate has passed a bill on the matter named Accountability for Cryptocurrency in El Salvador or ACES Act. This bill made its first appearance last year. Recently, legislators have reiterated the clauses mentioned in the bill and called for a detailed risk report concerning the impact of Bitcoin adoption.

Lawmakers have raised some questions about cybersecurity, economic viability, and protection of democratic values for the Central American nation.

Bitcoin as a Legal Tender can Lead to Financial Instability

The Foreign Relations Committee member of the United States, Senator Jim Risch has expressed his concerns about the greater impact of Bitcoin adoption in El Salvador. He pointed out in a new blog post that the decision to adopt Bitcoin as a legal tender can lead to financial instability and the weakening of the economy.

He maintained that the United States is currently introspecting on the ability of Salvador to combat financial crimes such as money laundering and illegal financial activities.

At the same time, he also urged legislators in the country to research the impact of Bitcoin’s legal tender adoption on Salvadorian economic and financial development. President Nayib Bukele shocked the world in 2021 by announcing the adoption of Bitcoin as a legal tender in the country alongside USD.

Regardless of internal and external criticism, the region has continued to double down on its Bitcoin adoption ever since. The government of the Central American nation has also issued a nationalized digital wallet called Chivo. At present, the national Bitcoin reserves of El Salvador hold 2381 BTC at an average cost of $48,357.

The cryptocurrency global sector has remained predominantly enthusiastic about Bitcoin adoption in Salvador. However, there are organizations like IMF that have rebuked the idea.

Regardless of the cynicism, Salvador invited prominent economist and author of Bitcoin Standard Saifedean Ammous to the country to its National Bitcoin office (ONBTC) ONBTC is a dedicated state department in Salvador established by Bukele to oversee the crypto sector in the country.

The Spanish media outlet, Expansion has reported that as per the Central Reserve Bank or BCR report, the total remittance amount reached $588 million in January. However, the Central Bank of El Salvador has noted that cryptocurrency transactions consist of only 1.8% of the $6.4 billion remittance sent to the country between Sep 2021 and June 2022.

President Bukele aimed to save remittance expenses for the country that is spent on using third-party services by offering Bitcoin as an alternative as one of the reasons for its crypto adoption.

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