El Salvador’s authoritarian president Nayib Bukele is none too pleased with U.S. politicians’ plan to monitor his country’s half-baked adoption of the BTC token as legal tender.
This week, a bipartisan trio of U.S. senators introduced a draft of the ‘Accountability for Cryptocurrency in El Salvador Act’ (ACES), which would “require reports on the adoption of a cryptocurrency as legal tender in El Salvador.” The bill follows El Salvador’s 2021 introduction of BTC as an acceptable coin of its realm, alongside the U.S. dollar.
ACES would require the U.S. government to report on (among other things) how El Salvador arrived at its decision to adopt BTC as legal tender, whether the country has the capacity to monitor and mitigate “the financial integrity and cyber security risks associated with virtual asset transactions” and whether said framework “meets the requirements of the Financial Action Task Force with respect to virtual-asset transactions.”
The report is also interested in BTC’s impact on El Salvador’s public finances, remittances from the U.S., relations with global financial bodies such as the IMF and the World Bank, “the potential for reduced use by El Salvador of the U.S. dollar” and whether BTC could be used to circumvent potential U.S. economic sanctions.
Once all that info is compiled, various U.S. agencies would be tasked with developing “a plan to mitigate any potential risk to the U.S. financial system posed by the adoption of a cryptocurrency as legal tender,” whether that adoption occurs in El Salvador or any other country that currently uses the U.S. dollar as legal tender.
You’re not the boss of me
As news of the bill spread, El Salvador’s ‘millennial dictator’ Nayib Bukele furiously turned his baseball cap around backwards and delivered a defiant retort via Twitter: “OK boomers… You have 0 jurisdiction on a sovereign and independent nation. We are not your colony, your back yard or your front yard. Stay out of our internal affairs. Don’t try to control something you can’t control.”
You have 0 jurisdiction on a sovereign and independent nation.
We are not your colony, your back yard or your front yard.
Stay out of our internal affairs.
Don’t try to control something you can’t control 😉
— Nayib Bukele (@nayibbukele) February 16, 2022
Clearly too busy flexing to monitor his irony meter, Bukele’s social media missive came just one day after he poked his digital nose into Canada’s internal affairs, slamming that country’s efforts to block foreign funding of the ‘trucker convoy/insurrection’ that has paralyzed the city of Ottawa and disrupted Canada-U.S. trade for several weeks. So, dictators in glass houses, yada yada…
Bukele’s decision to make BTC legal tender remains hugely controversial given its botched technical rollout, which did little to resolve the utter disinterest shown by local residents. To date, El Salvador’s BTC adoption is basically non-existent outside a few foreigner-friendly hotspots, including the infamous ‘Bitcoin Beach.’ Critics have accused Bukele of being far more interested in indulging the whims of foreign BTC Maxis—particularly the toxic tandem of Bitfinex/Tether and Blockstream—than addressing the day-to-day needs of his fellow citizens.
Bukele’s embrace of all things BTC might make him a star at crypto conferences but his anti-IMF stance is almost comically ill-advised given the country’s growing public debt-to-GDP ratio. Undeterred, Bukele has been using his country’s shrinking treasury to ‘buy the dip’ every time BTC crashes, but a sustained crash without an ensuing rebound could force Bukele to go baseball cap in hand to the IMF to beg for a bailout. Then again, given his millennial bona fides, he might move back in with his parents until things pick up.
Rock? Powder? Token?
Bukele’s animus toward the proposed U.S. legislation may have also been the result of him feeling a little vulnerable following recent activity just across El Salvador’s border. Monday saw the arrest of former Honduran President Juan Orlando Hernandez for allegedly leading a “violent, state-sponsored drug trafficking conspiracy.”
Hernandez, whose brother Tony is currently serving a life sentence in the U.S. for his role in the trafficking operation, will be sweating it out in a Honduras prison for the next couple months as he fights extradition to the U.S. on drugs and weapons charges.
Last year, a former El Salvadoran anti-corruption prosecutor accused Bukele of making a secret deal with local gangs—including the notorious MS-13—to reduce murder rates. Bukele’s concern was reportedly less to do with the safety of his countrymen than with boosting his chances of prevailing in local elections.
While El Salvador’s murder rate has indeed fallen, the number of ‘disappeared’ residents doubled from 2020 to 2021. Where those individuals go is anyone’s guess, but mass graves continue to be discovered, including one last December in Nuevo Cuscatlán—a suburb of San Salvador in which Bukele previously served as mayor—containing 26 bodies.
MS-13 has been linked to numerous stateside drug trafficking operations, making Bukele’s clandestine deal-making and El Salvador’s BTC experiment more than a passing concern among U.S. law enforcement agencies. Should evidence emerge that Bukele agreed to look the other way on MS-13 crimes of a more international flavor, boosting BTC adoption will be the least of his worries.
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