US Senate Cracks Down on El Salvador: Bitcoin Adoption Meets Human Rights Backlash

Washington draws a red line—crypto ambitions collide with alleged abuses.

El Salvador's Bitcoin gamble faces its toughest opponent yet: US lawmakers. A new Senate bill takes direct aim at the Central American nation's dual controversies—its pioneering crypto adoption and mounting human rights concerns.

The legislation threatens to freeze assets of Salvadoran officials tied to alleged violations. Meanwhile, Bitcoin maximalists cry foul, claiming financial innovation shouldn't be hostage to political disputes. 'Since when did DC care about due process?' quipped one crypto lobbyist.

Market watchers note the irony: the same institutions now criticizing El Salvador's Bitcoin move were silent during its dollarization in 2001. Some things never change—hypocrisy spends just fine in fiat or crypto.

Senators Push for Accountability Amid Rising Concerns

Senators Chris Van Hollen, Tim Kaine, and Alex Padilla put forward the bill in June 2025. Their proposal aims to confront what they describe as “gross violations of internationally recognized human rights” allegedly carried out by El Salvador’s executive branch.

The senators claim that taxpayer funds and cryptocurrency, particularly Bitcoin, may have been used to finance actions that violate the rights of individuals, including U.S. citizens. If passed, the legislation would require the U.S. State Department to prepare a report detailing the role of bitcoin in these alleged abuses.

Bitcoin’s Role Under Scrutiny

The El Salvador Accountability Act goes beyond traditional sanctions. It highlights concerns that Bitcoin, due to its pseudonymous and decentralized nature, may be providing a financial loophole for government corruption and evasion of international sanctions.

The bill mandates that the Secretary of State investigate whether Bitcoin has been used as a tool for graft, corruption, or to sidestep financial sanctions. This includes:

• An estimate of how much public money El Salvador has spent on Bitcoin.

• Identification of wallet addresses and crypto exchanges used by the government.

• A list of individuals who have access to the country’s Bitcoin reserves.

Targeting President Nayib Bukele and Cabinet Ministers

At the center of the controversy is President Nayib Bukele, who has aggressively promoted Bitcoin as a legal currency and a national reserve asset since 2021. While his administration argues that this strategy promotes financial inclusion and innovation, critics say the lack of transparency and centralized control raises serious ethical and legal questions.

The bill proposes direct sanctions on Bukele and several of his ministers. It also targets foreign individuals who have participated in alleged human rights abuses, particularly those involving U.S. citizens or funding from U.S. taxpayers.

Growing Political and Financial Risks

The U.S. Senate’s MOVE reflects increasing global concern over El Salvador’s Bitcoin experiment. While the Central American nation was the first to make Bitcoin legal tender, it has faced international backlash for not adhering to transparency standards typically expected from sovereign financial systems.

This bill could have broader implications for El Salvador’s international relations and financial markets. If passed, sanctions could restrict the country’s access to U.S.-based financial infrastructure and deter foreign investment.

In a statement, Senator Van Hollen criticized the Bukele administration, saying:

“President Bukele and the Government of El Salvador are colluding with the TRUMP Administration, taking American taxpayer dollars to imprison people as part of a scheme to violate their constitutional rights.”

Broader Implications for Crypto and Human Rights

The focus on Bitcoin’s potential misuse in human rights violations represents a new frontier in how governments may approach cryptocurrency regulation. While Bitcoin and other digital assets are often praised for decentralization and freedom from centralized control, they can also create risks when used in opaque or authoritarian systems.

Experts say the U.S. Senate’s push for crypto-related sanctions may influence other global powers to examine how digital currencies are used in international relations, compliance, and criminal investigations.

What Happens Next?

The bill is currently under consideration in the U.S. Senate. If approved, it could lead to:

• Travel bans and asset freezes for El Salvadoran officials.

• Diplomatic pressure on international organizations to audit El Salvador’s Bitcoin reserves.

• Expanded cooperation between U.S. regulators and crypto exchanges to identify accounts linked to corruption.

The El Salvador Accountability Act of 2025 may also set a precedent for how other nations adopt and regulate cryptocurrencies. For El Salvador, which continues to defend its Bitcoin adoption as a symbol of economic independence, the coming months could test the balance between innovation and accountability on the world stage.