Skip to content Skip to sidebar Skip to footer

El Salvador’s Bitcoin adoption raises concerns among US Senators

The decision of El Salvador to adopt Bitcoin as a legal tender has raised concerns among American lawmakers, who are urging the need for a risk assessment report to evaluate the potential impact on bilateral economic relations and cooperation in law enforcement.

In the previous month, Senators Jim Risch and Bob Menendez reintroduced a bipartisan bill that calls for a State Department report to be prepared regarding El Salvador’s adoption of Bitcoin. The legislation, known as the Accountability for Cryptocurrency in El Salvador (ACES) Act, was originally introduced in February last year.

American lawmakers are requesting an evaluation of the potential risks associated with El Salvador’s adoption of Bitcoin, specifically concerning cybersecurity, economic stability, and democratic governance within the country. In a blog post on the Foreign Relations Committee, Risch voiced his concerns about the potential consequences of El Salvador’s decision to adopt Bitcoin as a legal tender, expressing apprehension that it could undermine economic and financial stability.

El Salvador’s Bitcoin Strategy

El Salvador made headlines in 2021 when it became the first country to make Bitcoin legal tender.

Subsequently, the country has persistently advanced its efforts in promoting Bitcoin, as President Nayib Bukele has actively acquired significant quantities of the cryptocurrency. During mid-November, Bukele went a step further by declaring his intention to purchase one Bitcoin per day, commencing from November 18.

Currently, El Salvador possesses approximately 2,381 BTC, with an approximate value of $65 million. These holdings were acquired at an average price of $43,357.

Bukele’s Bitcoin experiment has been praised in the cryptocurrency world, but criticized by institutions like the International Monetary Fund and the World Bank.

In late 2022, President Nayib Bukele established El Salvador’s National Bitcoin Office in collaboration with well-known Bitcoin advocates Stacy Herbert and Max Keiser. In a recent development, El Salvador appointed Saifedean Ammous, a renowned economist and the author of “The Bitcoin Standard,” as an economic advisor to its National Bitcoin Office (ONBTC). The ONBTC is responsible for overseeing all cryptocurrency-related affairs in the country.

On the other hand, reports regarding the adoption of Bitcoin in the small Central American nation have been varied, suggesting a slower-than-expected uptake. Based on government data, cryptocurrency accounts for less than 2% of the total remittances received by El Salvador.

Remittances, primarily sent by Salvadorans residing overseas, constitute a significant source of income for the country. In fact, for this same reason, the government promised that BTC would provide more options and greater convenience for those sending and receiving remittances.

To facilitate Bitcoin remittances from overseas, the country introduced a dedicated BTC app. However, data from the previous year revealed that only 20% of the app’s initial users continue to actively utilize it.

Leave a comment