The announcement by the President of the Republic, Nayib Bukele, to send a proposal for bitcoin to become legal tender in the country has been described by economists as a risky move by the Government.
Experts warn that the hasty approval of bitcoin as legal tender could open a rift for corruption and money laundering, two issues that Bukele himself promoted in his election campaign, as priorities of his Government.
Bukele made the announcement of bitcoin a day after informing that it was breaking the cooperation agreement with the International Commission against Impunity in El Salvador (CICIES) of the Organization of American States (OAS). This has cost him criticism where it is indicated that it is a “smokescreen”, in addition to the risk that the proposal itself implies, according to experts on the subject.
Bitcoin is a digital currency or cryptocurrency that, by not going through any bank or control of the financial system, leaves no trace of the transactions that are made.
“When (the money) passes through the financial system there is a trace and all money laundering activities are under control. But when they are done via cryptocurrencies that is lost and this can encourage more money laundering in the country, more incentives for drug traffickers, extortion, money laundering from corrupt public officials, “said economist Luis Membreño.
The expert also emphasizes that this can endanger the economy of citizens, because the currency is fluctuating and in recent months it has had notable falls.
For his part, the economist Ricardo Castaneda questioned that the issue has not yet been clarified by the authorities despite the doubts that have arisen since Bukele’s announcement. “Each decision can affect millions of people. It is an absolute shame that the population has to find out about such important decisions through third parties,” he said.
On the other hand, Membreño believes that it could affect tax collection, since they are purchases that would go unnoticed. The Minister of Finance, Alejandro Zelaya, has argued that given the high amounts of debt that the country has acquired so far in the Bukele administration, tax collection and the fight against tax evasion would be his main bet.
“The Minister of Finance has been saying that he wants to collect taxes on electronic commerce, but what would happen if all that commerce is done with cryptocurrencies? How is he going to charge them? I think that their tax collection may even fall”, Membreño questioned.
Membreño assures that the ideal would be for the Central Reserve Bank (BCR) to speak and participate in the discussion in the Assembly.
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