US State Department Advises El Salvador to Regulate Bitcoin

Divya  |  Jul 2, 2021

Victoria Nuland, the Under Secretary of State for Political Affairs at the US Department of State, asserted that El Salvador must regulate Bitcoin(BTC) within its new legal framework. Nuland revealed her suggestion during a press conference following her meeting with the country’s President Nayib Bukele.

US State Department Warns El Salvador Against Bitcoin-related Hacks

Nuland’s discussions with President Bukele and Salvadoran Minister of Foreign Affairs, Alexandra Hill Tonoco, were part of her planned visit to El Salvador, Paraguay, and Panama. Her tour was focused on talks about migration, democracy, and goals for the region.

However, the subject of cryptocurrencies found its way into Nuland’s agenda in the wake of widespread ransomware attacks in the US, which have debilitated critical infrastructure and prompted strong reactions from the Biden administration. The issue gained prominence after the Colonial Pipeline hack, which saw disruption to fuel supply in half of the Eastern Seaboard.

As part of her suggestions, Nuland advised President Bukele to take adequate measures to regulate Bitcoin. She said the United States was taking a  “tough look at Bitcoin” and El Salvador needs to do the same. The Central American country had passed legislation adopting BTC as legal tender on June 7, which will take effect in September.

"I did suggest to the President that whatever Salvador chooses to do with regards to Bitcoin, you ensure that it is well regulated, that it is transparent and that it is responsible, and you protect yourself against malign actors," Nuland noted.

Nuland Hopes El Salvador and IMF Will Reach a Consensus on Bitcoin

The US isn’t alone in raising its guard on El Salvador’s Bitcoin adoption. Following the passage of Bitcoin law in the country, the World Bank and the International Monetary Fund(IMF) have also expressed skeptical views on the asset’s implementation.

The IMF in particular is concerned by El Salvador’s decision. The country is in talks with the institution for a financial agreement of nearly $1 billion.

The US State Department has indicated its support for the loan. In her speech, Nuland hoped that the Salvadoran lawmakers and the IMF will reach a consensus on Bitcoin while completing the financial agreement.

 

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