Constituent policy

El Salvador’s Bitcoin Surge Predicts a Modern US International Policy Toolkit Op-Ed

  • The bill was introduced in the US House of Representatives just as President Nayib Bukele was preparing to travel to Miami for the Bitcoin 2022 conference after a spate of gruesome gang killings claimed his lives. to 70 people.
  • A number of well-publicized institutional funding offenses have resulted in fines rather than technically viable policy adjustments that narrow loopholes for terrorists and criminals. Wells Fargo, for example, allowed the Mexican drug cartel to launder $378 billion through its bank in 2010.
  • If the Federal Reserve system fails to stop Bitcoin, the United States should consider joining the race for hash power in order to maintain its global monetary power.

The El Salvador Cryptocurrency Senate Accountability Act (ACES) was introduced on Monday by U.S. Representative Norma Torres (D-CA). Rep. Rick Crawford (R-AR) is one of the bill’s co-sponsors. Rep. Torres said El Salvador’s introduction of bitcoin is a hasty gamble undermining the country, not a cautious approach to innovation. The law directs the State Department and other heads of U.S. federal departments and agencies to investigate bitcoin adoption in the Central American Pacific country and report to Congress within 60 days of its adoption.

Valid issues

ACES is looking for proposals on cybersecurity and national security, as well as ways to defend U.S. interests abroad, especially the reserve currency status of the dollar. The bill was introduced in the US House of Representatives just as President Nayib Bukele was preparing to travel to Miami for the Bitcoin 2022 conference after a spate of gruesome gang killings claimed his lives. to 70 people.

ACES went through a Senate committee in February and could go to a full Senate vote. El Salvador’s President Nayib Bukele denounced the bill as US intervention in El Salvador after clearing that hurdle. He claimed that the US administration was afraid of El Salvador’s adoption of bitcoin as legal tender and advised the US to stay away from the country. However, the US federal government’s fears over Bukele’s desire to embrace bitcoin are understandable.

US Senator Jim Risch (R-ID) said in February: This new doctrine has the potential to erode US sanctions policy, empowering hostile actors such as China and the organized criminal organizations. Our bipartisan bill wants more clarity on El Salvador’s policies and asks the administration to reduce any potential risk to the financial system in the United States. Senator Bill Cassidy (R-LA) went on to say:

Recognizing Bitcoin as the official currency in El Salvador, it opens the door to money laundering cartels and jeopardizes US interests. If the United States wants to prevent money laundering and retain the role of the dollar as the world’s reserve currency, it must address this problem head on.

If the State Department’s analysis called for by the bill is thorough, Bitcoin’s transparency (all accounts and transactions on the Bitcoin blockchain are publicly visible) may make it easier to monitor and combat activities. criminal offenses by national security and law enforcement authorities.

Although Congress has legitimate concerns, most US lawmakers seem to be way behind when it comes to bitcoin and cryptocurrency trading. see the 2016 science.org article why criminals can’t hide behind bitcoin and the 2018 article Startups helping the FBI catch bitcoin criminals as a starting point.

In fact, it is the Federal Reserve’s corporate banks that have a bad track record allowing criminals and terrorists to launder money in their corporate vaults in exchange for US dollars. A number of well-publicized institutional funding offenses have resulted in fines rather than technically viable policy adjustments that narrow loopholes for terrorists and criminals. Wells Fargo, for example, allowed the Mexican drug cartel to launder $378 billion through its bank in 2010. (Source: The Guardian)

After learning that it had laundered hundreds of millions of dollars for terrorists, the drug cartel and sanctioned regimes, the United States fined HSBC $1.9 billion in 2012. (Du New York Times). JP Morgan, the largest U.S. institutional bank, was fined $5.3 billion by the U.S. Treasury in 2018 for violating Cuba and Iran sanctions 87 times. (Sabah Daily)

Conventional financing against Bitcoins

If bitcoin and peer-to-peer finance continue to grow in popularity around the world, the US sanctions strategy will be permanently weakened. However, they have never been effective instruments of foreign policy. They are more like effective electoral tools that fail to achieve foreign policy goals while giving legislators the illusion of doing something about international issues that their constituents learn about. Sanctions imposed by the United States have also failed to bring about serious political change in countries such as China, Iran, North Korea, Russia and Venezuela. –Council on Foreign Relations

To influence foreign powers, the US State Department and lawmakers will need to adopt a new paradigm of positive incentives (carrots rather than sticks). The United States will continue to be able to impose limits on governmental foreign aid and foreign direct investment by established US companies whose capital is highly valued in developing countries. If the Federal Reserve fails to stop Bitcoin, the United States should consider joining the race for hash power in order to maintain its global monetary power.

ALSO READ: IMF Expresses Concern Over Continued Use Of Crypto

Nancy J. Allen
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