IMPORTANT POINTS:
- Bolivia lifts the ban on Bitcoin allowing crypto transactions via banks.
- Cryptocurrencies are not accepted as legal tender in Bolivia.
- Latin America is increasingly adopting the use of cryptocurrencies to combat inflation and modernize their economies.
Bolivia’s central bank, Banco Central de Bolivia, has lifted its ban on Bitcoin (BTC) and cryptocurrency payments, allowing financial entities to transact digital assets in an effort to modernize their payments system.
The central bank stated that the measure was taken to help Bolivia lift its struggling economy and align it with Latin America’s crypto regulations.
The change in regulatory stance marks the end of a ban on cryptocurrency use in the country that began in 2014. The government banned banking entities from interacting with cryptocurrencies in December 2020 under Board Resolution No. 144/2020.
Bolivia joins Latin America’s pro-crypto league
Newly approved regulations allow banks to conduct cryptocurrency transactions through approved electronic channels. However, the central bank clarified that cryptocurrencies are not accepted as legal tender.
Thus, although cryptoassets are exchangeable through banks, the Bolivian government does not recognize them as legal tender and companies are not required to accept them as payment.
Under its Economic and Financial Education Plan, the Central Bank of Bolivia also plans to create an awareness program for the general public. This plan attempts to inform the public about the possible risks associated with cryptocurrencies and how to manage them responsibly.
The new legislation was introduced in collaboration with the Financial Investigation Unit, the Financial System Supervisory Authority and the central bank. The three government bodies produced the regulatory update, which came into effect on June 26.
The new legislation also aligns Bolivia’s crypto regulation with suggestions made by the Latin American Financial Action Task Force, becoming another Latin American nation to adopt cryptocurrencies to help boost its economy.
Latin America is pro-Bitcoin
In recent years, several Latin American nations have been struggling with a failing economy and rising inflation, forcing them to look for alternative economic solutions. Bitcoin and the use of cryptocurrencies have emerged as one of the most popular forms of a new economic model.
El Salvador was the first country in Latin America and the only country in the world to adopt Bitcoin as legal tender alongside the US dollar in 2021.
Mexico does not recognize cryptocurrencies as legal tender, but accepts them for value transfers and payments . Additionally, Mexico taxes profits from cryptocurrency sales on centralized exchanges.
Brazil is another nation that has gone pro-crypto amid rising adoption. The country introduced income tax regulations in 2023, allowing for a 15% tax on crypto gains.
Argentina, another Latin American nation, has recently elected a pro-Bitcoin president in an effort to combat rampant inflation, following the example set by El Salvador.
