Two members of Congress have submitted legislation intended to reduce the dangers to the US financial sector as a result of El Salvador’s adoption of Bitcoin referred to as (BTC) as an official currency.
Representatives Norma Torres of California, as well as Rick Crawford of Arkansas, introduced regulations this Monday that would require the state to create a new plan to alleviate potential dangers to the US financial sector based on an assessment of the dangers to El Salvador’s economic strength, cybersecurity, and governance after the nation’s acknowledgment of Bitcoin as official currency in the September of 2021.
The El Salvador Accountability for Cryptocurrency Bill is a subsidiary bill to federal regulations passed during February in Congress.
Furthermore, the bill asked the Secretary of State and the leaders of legal divisions to present a roadmap to the State within two months to reduce any possible threat to the financial framework presented by the implementation of cryptos as legal currency in El Salvador as well as several different nations that recognize the dollar. These other nations include Micronesia, East Timor, Palau, Zimbabwe, Ecuador, as well as the Marshall Islands.
As per information provided by the International Monetary Fund, using Bitcoin as legal currency creates serious threats to economic stability, fiscal reputation, and customer rights.
El Salvador is an autonomous democratic country, and we should respect its ability to self-govern; however, the US should have a strategy in order to safeguard our financial institutions from the hazards of this move. This seems to be a hasty bet instead of a considered endorsement of innovation, according to Torres.
US representative James Risch of Idaho, the bill’s proponent, stated in February that El Salvador’s adoption of Bitcoin as recognized currency raised significant concern about the country’s financial structure and fiscal responsibility as well as those of a fragile US trading nation in Central American nations. Senator Bill Cassidy of Louisiana, one of the bill’s co-sponsors, argued that the nation’s Bitcoin Law might allow money laundering gangs to operate and undermine the dollar’s status as the world’s currency reserves.
The regulations complied the Foreign Relations Council’s requirements in March this year and may currently be recognized for a complete Senate approval. El Salvador’s President and leader, Nayib Bukele, responded to the bill’s emergence in February by imploring the United States to keep their nose away from the nation’s domestic matters as well as to the bill’s enactment the next month by claiming that the United States Council doesn’t advocate for freedom.
What This Could Mean
With countries such as El Salvador passing bills like this, a new age is being ushered in. The adoption of cryptocurrency as a viable currency could bring a host of ramifications on several fronts.
Crypto has proven to be extremely volatile since its inception; the use of this currency as a recognized form of payment could affect the fiscal stability of the nations that adopt it. This can result in established economies suffering some serious losses based on the movements of cryptocurrencies and, on the other hand, could also result in potentially colossal gains.
On a global scale, crypto still has a cloud of controversy that floats over it. With some nations adopting these currencies, major financial players such as the US and the UK are forced to adapt and change in order for trade agreements to be preserved. Evidently, these implications are causing some tension between nations. Either consensus or a compromise has to be reached between nations that choose to welcome the innovation that is crypto with open arms and those who still remain wary of the digital currency. A failure to do so could really question the financial integrity of the system that is currently in place.
The Bottom Line
The financial world as we know it has already begun changing rapidly. It is crucial that matters such as the acceptance of cryptocurrency as a legitimate currency are handled correctly. Thus, the failure to impose the appropriate legislation on the currency opens the door for financial fraud and money laundering. These can result in huge losses of funds and should be treated as severe threats to the financial integrity of any nation.
While the innovation should not be ignored due to these threats, they should be appropriately handled through legislation.
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