Bolivia’s central bank, Banco Central de Bolivia, has lifted its ban on Bitcoin and crypto payments, allowing financial entities to conduct transactions with digital assets in a bid to modernize its payment system.
The central bank said the move was made to help Bolivia elevate its struggling economy and align it with Latin American crypto regulations.
The change in regulatory stance marks the end of a ban on crypto use in the country that began in 2014. The government prohibited banking entities from interacting with cryptocurrencies in December 2020 under Board Resolution N°144/2020.
Bolivia joins the pro-crypto Latin American league
The recently approved regulations allow banks to transact in cryptocurrencies via approved electronic channels. However, the central bank clarified that cryptocurrencies are not accepted as forms of legal tender.
Thus, although crypto assets are tradable via 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, Banco Central de Bolivia also plans to create an awareness program for the general public. This plan attempts to inform the general public about the possible risks associated with cryptocurrencies and how to manage them responsibly.
The new legislation was introduced in collaboration with the Financial Investigations Unit, the Financial System Supervisory Authority and the central bank. The three government bodies produced the regulatory update, which became effective June 26.
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The new legislation also aligns Bolivia’s crypto regulation with the suggestions made by the Latin American Financial Action Task Force, making it another Latin American nation to adopt crypto to help it boost its economy.
Latin America is pro-Bitcoin
Over the past few years, several Latin American nations have been struggling with a failing economy and rising inflation, forcing them to look for alternative economic solutions. Bitcoin (BTC) 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 along with the United States dollar in 2021.
Mexico does not recognize cryptocurrency as legal tender but accepts it for value transfers and payments. Additionally, Mexico taxes profits from cryptocurrency sales on centralized exchanges.
Brazil is another nation that has turned pro-crypto amid increased crypto adoption. The country introduced income-tax regulations in 2023, allowing a 15% tax on crypto profits.
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.
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