San Salvador, Jun 21 (EFE).- The lack of controls in El Salvador on the use of cryptocurrencies in politics opens up the possibility that organized crime or foreign interests may be able to finance candidates’ presidential campaigns for the 2024 elections, when mayors and legislators will also be chosen, thus having an “impact” on the country’s democracy.
El Salvador in 2021 became the world’s first country to make Bitcoin a legal tender, whereby the Central American nation opened itself up to the allowing the use of the cryptocurrency without any more extensive controls.
The lack of oversight of campaign financing by cryptocurrencies in the country and the characteristics of those currencies will create significant “stress” on the ability of the Supreme Electoral Court (TSE) to monitor the presidential contest, experts have warned.
The executive director of Accion Ciudadana, Eduardo Escobar, said that foreign interests could try to influence the elections by financing campaigns using cryptocurrencies.
This could “create more stress on the transparency” of the vote, he told EFE.
Accion Ciudadana, a non-governmental organization, since 2016 has been studying the financing of political parties and puts out a transparency index.
He said that “the lack of adequate controls on the money financing politics and the lack of a settling of accounts by the parties are conditions that create the risk of illegal campaign financing.”
“There could be currency laundering, … foreign governments that fiance the campaigns, organized crime. … This could have an impact on Salvadoran democracy … and influence political decisions,” he added.
“So, we’re warning that measures must be taken, the use of cryptocurrencies to finance election campaigns must be regulated or prohibited, in the best situation, due to all the risks they imply,” Escobar said.
The Salvadoran government was the first national government in the world to buy Bitcoin using state funds to the tune of more than $100 million and to hold the cryptocurrency as a monetary reserve.
The only official information that has been made known about those purchases and the adoption of Bitcoin comes from the tweets of President Nayib Bukele, given that secrecy has been imposed on the institutions involved in the matter.
The coordinator of monitoring and transparency for Accion Ciudadana, Denisse Siliezar, told EFE that it’s important for the TSE to “issue directives” so that parties and candidates know “the specific treatment they must give to cryptocurrency donations.”
She said that the source of the crypto donations must be able to be known so that the intentions of the financing actors may be understood, but she added that El Salvador does not have an “efficient and robust” system of fiscal controls and the TSE does not have a specialized unit to “control and audit” the resources of political parties.
She said that the time is “rather short” for implementing appropriate measures to regulate campaign financing with cryptocurrencies, given that the elections are to be held in just two years.
The parties with the poorest rankings in terms of transparency according to Accion Ciudadana’s 2021 index are the opposition Farabundo Marti National Liberation Front (FMLN), and the governing New Ideas (NI) and Great Alliance for National Unity (GANA).