U.S. Prepares to Monitor Bitcoin Operations in El Salvador

Three legislators presented a bill on the matter, which has been approved by a Senate committee and will later be put to the vote.
The president of the Central American country, Nayib Bukele, immediately reacted to the action, confronting one of the proponents of the bill on Twitter.
If the initiative is approved, the U.S. could being monitoring all cryptocurrency operations carried out by the Central American country.

The U.S. Senate could pass a bill to monitor Bitcoin operations in El Salvador. The initiative, presented by Republican legislators Bill Cassidy, James Risch and Democrat Bob Menéndez, has already passed the examination of the Committee on Foreign Relations of the U.S. Senate this week.

The bill, called ‘Responsibility Law for Cryptocurrencies in El Salvador’ or the ‘ACES Law‘, would allow United States agencies to monitor capital movements made to the country in cryptocurrencies. However, the proposal is limited to transactions made within the U.S. as they do not have jurisdiction in El Salvador itself.

The bill now moves to the U.S. Senate for discussion, including an extensive list of issues related to cryptocurrency operations in El Salvador. Among the issues are remittances from the US, risks of laundering and money laundering, monetary policy, and the finances of Salvadorans residing in that country.

After passing the Bitcoin Law in September 2021, El Salvador installed a network of Bitcoin ATMs across several U.S. cities to enable Salvadoran immigrants to send remittances from the U.S, the country from which the largest volume of remittances are sent to El Salvador.

Bukele vs Cassidy

Senators have argued that the law seeks to protect the U.S. financial system from the possible adverse consequences arising from the adoption of bitcoin as legal tender in El Salvador.

There is still no defined date for when the discussion and approval of the bill will take place in the U.S. Congress. After the bill passed its first stage of approval in the Senate committee, President of El Salvador Nayib Bukele immediately reacted through Twitter, as usual.

“Never in my wildest dreams would I have thought that the United States government would be afraid of what we are doing here,” said the Salvadoran leader, mocking Senator Bill Cassidy, the main promoter of the bill.

Senator Cassidy, then, responded to Bukele’s remarks, saying:

“Salvadoran residents in the United States don’t like this policy. We are being responsive to their concerns. Perhaps they don’t trust a president who brags about trading Bitcoin ‘naked.’”

To which Bukele jokingly replied once more: “Sometimes while in the toilet…”

In February, the three U.S. senators asked the White House to investigate bitcoin operations in El Salvador. The proposal sparked confrontation between Bukele and legislators, as the Central American president tweeted:

“We are not your neighborhood, your backyard, or your front yard. Stay out of our internal affairs. Don't try to control something you can't control."

On the Flipside

In 60 days, the State Department will present a report related to the possible risks of bitcoin in El Salvador.
Bukele has faced backlash from both in and outside his of country for having adopted bitcoin as legal tender.
This week his government announced the postponement of the launch of bitcoin bonds.

Why You Should Care

Bukele’s confrontation with the U.S. comes as his controversial monetary policy regarding bitcoin faces intense scrutiny with bitcoin’s prices remaining depressed.

Meanwhile, on Thursday the 24th, Bukele met with the CEO of Binance, Changpeng Zhao, seeking support to better promote cryptocurrency in his country.

The Federal Reserve, for its part, has accelerated the process for the issuance of the digital dollar, the U.S. CBDC, which will compete with bitcoin, at the request of U.S. President Joe Biden.