Regulation
Bolivia reverses Bitcoin ban, allows bank-facilitated transactions
In a significant policy change, Banco Central de Bolivia has lifted its ban on cryptocurrency transactions, allowing financial institutions to interact with digital assets as part of an initiative to modernize its payment systems.
The measure, which came into force on June 26, ends a ban on the use of cryptocurrencies dating back to 2014, signaling Bolivia’s intention to rejuvenate its faltering economy and harmonize with broader regulations on cryptocurrencies. cryptocurrencies in Latin America.
Historical context
Previously, under Board Resolution No. 144/2020 issued in December 2020, Bolivian banking entities were prohibited from interacting with cryptocurrencies.
However, the recent legislative overhaul allows these institutions to engage in cryptocurrency transactions through authorized electronic channels, although it does not go so far as to recognize cryptocurrencies as legal tender.
As a result, while businesses can exchange digital assets through banks, they have no obligation to accept them as payment.
Source: Central Bank of Bolivia
Edwin Rojas Ulo, president of the central bank, said the new decision will provide the population with an “additional mechanism that will contribute to strengthening financial and commercial activities.”
The institution nevertheless clarified that the Boliviano (BOB) was the only legal currency in the country and that these digital assets were neither legal means of payment nor cash. This means that users of these crypto-assets will have to face the risks associated with their use and marketing.
The Central Bank of Bolivia is also preparing to roll out an economic and financial education plan aimed at raising public awareness of the potential risks and responsible management of cryptocurrencies.
This initiative emphasizes a cautious approach, seeking to balance the adoption of innovative technologies and consumer protection.
Regional Trends in Cryptocurrencies
The updated regulations were developed in collaboration with the Financial Investigation Unit and the Financial System Supervisory Authority, in accordance with the recommendations of the Latin American Financial Action Task Force.
This alignment not only positions Bolivia among the growing list of Latin American countries adopting cryptocurrency measures to bolster their economic prospects, but also underscores the regional trend toward integrating digital assets into traditional financial strategies.
Latin America is increasingly turning to cryptocurrencies as a solution to economic challenges, including persistent inflation and economic instability. Several countries in the region have taken different stances on cryptocurrencies depending on their specific economic landscape.
El Salvador led the way as the first, and so far only, country in the world to recognize Bitcoin as legal tender alongside the US dollar in 2021. This pioneering move aimed to improve financial inclusion and boost economic growth.
Mexico, which does not recognize cryptocurrencies as legal tender, allows their use for value transfers and payments. The country has also implemented tax measures on profits from cryptocurrency transactions on centralized exchanges.
Similarly, Brazil introduced tax regulations on crypto profits, imposing a 15% tax, reflecting growing acceptance and integration of digital currencies into its financial system.
Argentina followed suitInspired by El Salvador, has elected a pro-Bitcoin president as part of efforts to combat high inflation. The move underscores a regional shift toward using cryptocurrencies as a strategic response to economic adversity.
Collectively, these developments indicate a significant shift in Latin America’s financial landscape, with Bolivia now joining its neighbors in the strategic adoption of digital assets to strengthen economic stability and foster a modernized financial sector.