Last month when I wrote about the news El Salvador's Bitcoin Adoption May Pose Risks to US Financial System in my post titled - Can't They Just Leave El Salvador Alone? I thought it was joke and it wouldn't become anything serious. Today, it looks like the actual bill has be prepared and cleared the committee stage and will be heading to Senate floor for the vote. If you would like to read the text of the bill, you can do so here. It is really disappointing to see lawmakers spending their time to undermine the genuine efforts of a foreign country to improve its economy and lifestyle of its people.
The bill was written by US Senators Jim Risch, Bob Menendez, and Bill Cassidy and was titled Accountability for Cryptocurrency in El Salvador Act when it was first introduced in February. The purpose of the bill is to require government agencies and the State Department to collect reports on the adoption of bitcoin as a legal tender in El Salvador, and develop plans to mitigate potential risks to the US Financial System. It sounded strange when it was introduced last month, and it still does. Why would US financial system be threatened by a country like El Salvador?
The president of El Salvador had the same question in his mind when he became aware of this and tweeted the following:
Never in my wildest dreams would I have thought that US Government would be afraid of what we are doing here.
Seriously! There is no comparison of the size of economy, financial transactions, and global influence between the US and El Salvador. El Salvador has been doing what they deem is necessary for their economy and financial system. First, it should be no other country's business what they are doing. Second, what is the point?
I can see how bitcoin may be a risk to USD and US financial system if all of the sudden bitcoin gained massive adoption globally and more and more countries adopted bitcoin as legal tender. Even then the risk assessment should be done against bitcoin, not the country that is trying to utilize it.
In my opinion the bill itself is not written in good faith and is contradictory. On the one hand it is ordering US agencies to do some research and study how things are going with bitcoin adoption in El Salvador, and on the other hand it is also ordering to come up with solutions to mitigate the risks these actions pose to the US financial system. If they want some research done, and reports created so that they can have a better information to make more educated decisions in what actions to take, that would be ok. In fact, that would be great. All of us can benefit from well done research and reports. The problem is the already make the conclusion that El Salvador's actions are a threat to the US financial system, in the same bill. That is contradictory, in my opinion.
Better approach would be, to actually have a genuine interest on the topic of bitcoin or other cryptocurrencies being adopted as legal tender. Until El Salvador started adopting bitcoin as legal tender, this concept was only theoretical. We could discuss about it, its benefits and consequences. But now we have this being done in practice. And nobody really knows what the outcome will be. It can fail and or it cane become a huge success. In either case it wouldn't destroy US financial system. That's why this presents a great opportunity for academia, politicians, lawmakers, and financial experts not only in the US but around the world to watch closely and study the progress in El Salvador. Perhaps, even offer help if needed. Why not? Shouldn't we all be rooting for success of one another in the international arena, when it comes to eliminating poverty, improving lifestyles, establishing business relationships, etc?
It is clear the bill is not El Salvador or crypto friendly. It is not a law, yet. It would still have to go through the senate vote. If passed will go to the House of Representatives for them to vote. And even after that president Biden will have to sign it. If it actually did become a law, it would only prove one thing. That is US lawmakers are really bored and don't have anything else to do. About a week ago when Senate passed a legislation that would make daylight saving time permanent starting in 2023, it seemed like they finally were starting to work on thing that matter. Well, it didn't take long for them to get bored again. Joke.
I also do not like the public officials use words cryptocurrency and bitcoin interchangeably. Every crypto asset have its unique characteristics. When one can be of great use on certain situations, another may not work as well. Cryptocurrency refers to so many crypto projects and assets. There is only one Bitcoin. It is easier to define what bitcoin is and judge it on its own merits, rather than using generalized concepts. It is also clear that El Salvador has adopted only bitcoin as legal tender and no other crypto assets. Since this bill is specifically targeting El Salvador and its bitcoin endeavors, it would be more accurate to only require the reports on bitcoin. When they start using bitcoin and cryptocurrency interchangeably, it makes it easy for them to attribute anything negative they may have seen in any other crypto assets.
While El Salvador made bitcoin a legal tender, it also kept US dollars as legal tender as well. They didn't replace US dollars with bitcoin. They made it possible for people and businesses to use both. I think this should be celebrated by US lawmakers. The fact, El Salvador decided to explore bitcoin use when they already had USD as legal tender, is what should have raised concerns. And perhaps, research and reports they should have sought had to be why would a foreign country that uses USD as legal tender seek alternative options? If they ask questions like this, they may get a better understanding that will help in making meaningful laws that can better USD as a currency.
Usually in the business world, when a responsible company see its loyal customers trying alternative products, such companies would try to figure out the reasons and work on improving their product so that they can win back these loyal customers.