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Puerto Rico lawmakers believe blockchain technology can reduce corruption on the island

December 6, 2021, 5:42 PM UTC

As Puerto Rico has been beset by corruption allegations, the island’s legislature will begin holding meetings on how to use the blockchain technology that underpins cryptocurrencies such as Bitcoin to reduce government graft. 

Puerto Rico House Speaker Rafael “Tatito” Hernandez said he will begin meeting with members of the island’s growing blockchain industry this month about creating “smart contracts,” on embedded computer programs in the protocols, that might bring more transparency and accountability to the public sector.

“We have a real credibility problem,” Hernandez told Bloomberg on the sidelines of a Puerto Rico Blockchain Trade Association conference. “And this might be part of the solution.”

The U.S. territory of 3.3 million has been rattled by corruption scandals in recent years. On Friday, the mayor of Catano pleaded guilty to accepting more than $100,000 in bribes and luxury watches in exchange for millions in municipal contracts. The local FBI office has suggested more public-sector indictments are in the works.

Hernandez said the industry meetings are also part of a broader effort to make Puerto Rico a hub for cryptocurrency and blockchain innovation.

The island’s tax incentives, particularly no capital gains tax, including on cryptocurrency gains, has helped attract thousands of new residents.

The Department of Economic Development says demand for those tax breaks has tripled in recent years, and more than 1,000 people have been approved for the benefits in 2021, breaking the previous record from 2018.  

Hernandez said the blockchain and crypto industries might be a way for the bankrupt commonwealth to jump-start its economy. 

“Back in the 60s and 70s we had the niche of manufacturing,” he said. “This is a new niche, a new opportunity to create jobs.”

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