US Senate Takes Aim at El Salvador’s Bitcoin Bet: Bukele Faces Sanctions Over BTC Strategy

El Salvador's Bitcoin gamble just hit a political minefield. The US Senate is pushing a bill that could sanction President Nayib Bukele's crypto experiment—turning the tiny nation's financial revolution into a geopolitical flashpoint.

Bukele's high-stakes play

Since adopting Bitcoin as legal tender in 2021, El Salvador's leader has doubled down—buying the dip, building Bitcoin mines, and even issuing volcano bonds. Now Washington's throwing regulatory punches at this unorthodox economic strategy.

The crypto cold war heats up

This isn't just about sanctions—it's a clash of financial ideologies. While Wall Street still treats crypto like a risky side hustle, Bukele's all-in approach makes El Salvador the world's most interesting monetary lab experiment. Of course, when a developing nation out-innovates the Fed, someone's bound to get nervous.

Will the Senate's move chill crypto adoption—or just prove Bukele's point about decentralized finance bypassing traditional power structures? Either way, the message is clear: disrupt the dollar's dominance at your own peril.

Democrats mandate a detailed US government report

Under the provisions of “S. 2058,” the US Secretary of State, in coordination with the Secretary of the Treasury, WOULD be required to submit a report within 90 days of the bill’s enactment. The report must be released to appropriate congressional committees and question the Salvadoran government’s use of crypto.

The report will analyze whether President Bukele and his officials have used digital assets “for gross corruption, graft, and evading US laws.” It would also examine the total amount of funds the government has spent purchasing Bitcoin, the exchanges used, wallet addresses, and the individuals who control these accounts.

HAHAHAHAHAHAHA the Dems are just salty… https://t.co/O6CLtZuV46

— Nayib Bukele (@nayibbukele) July 8, 2025

Since 2021, Bukele’s government has aggressively accumulated digital assets, reportedly buying one Bitcoin per day and amassing a treasury of over 6,200 BTC. 

More queries will be made into the use of Bitcoin to evade international financial restrictions. The report must include an assessment of crypto being employed as a “vector to evade financial sanctions imposed on other entities,” through anonymous wallets.

Other officials listed include the Vice President, Minister of Foreign Relations, Minister of Defense, Minister of Economy, and Minister of Finance. 

The sanctions would apply if there is credible evidence showing any of them were involved in suppressing civil liberties or aiding in illicit financial activities.

One of the legal concerns raised by lawmakers is the government’s use of a “state of exception,” a law that allows for the temporary suspension of certain civil rights. According to the bill, such provisions have allegedly been misused to crack down on political dissent and civil society.

US aid and political support to El Salvador under scrutiny

In an interview with Fox News back in April, Democrat Representative Jamie Raskin (D-MD) said he was “frustrated” over continued American aid to El Salvador. Raskin questioned the Salvadoran government’s refusal to return Kilmar Garcia, a US citizen who was imprisoned in El Salvador.

Kilmar Abrego Garcia was brought back to the United States from El Salvador on June 6, 2025, after being mistakenly deported in mid‑March.

Raskin described the arrangement between the US and El Salvador as “dubious,” noting that Bukele has been receiving $6 million from America under a repatriation agreement. According to Raskin, this financial support implies legal authority, which Bukele allegedly refused to exercise by keeping Garcia in detention.

“You know, we should be talking about cutting off aid to El Salvador right now,” Raskin said. “The whole idea that Bukele doesn’t have any power to return an American prisoner… is ridiculous. He’s our legal agent.”

On July 7, a federal judge rejected the Justice Department’s attempt to dismiss Kilmar Abrego Garcia’s lawsuit over his mistaken deportation to El Salvador, calling one of the motions “meritless.”

“You made three arguments, defendants, and none are availing… meritless,” US District Judge Paula Xinis told Justice Department attorney Bridget O’Hickey.

The Salvadoran government has not formally addressed the detailed findings required by the US Senate’s bill, nor has it confirmed if it will cooperate with any investigations into its government’s crypto use.

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