Key Takeaways
- The BCB emphasized that cryptocurrencies are not considered legal tender in Bolivia.
- The new regulation allows banks to transact in crypto via approved electronic channels.
Bolivia has officially lifted its ban on Bitcoin and other cryptocurrencies, allowing financial institutions to engage in crypto transactions. The Central Bank of Bolivia (BCB) announced the regulatory change on June 26, marking a significant shift in the country’s stance on digital currencies.
This decision comes after years of strict regulations. In 2014, Bolivia’s Financial System Supervision Authority issued a resolution prohibiting the use of cryptocurrencies, citing a lack of consumer protection and potential for money laundering. The ban was reinforced in 2020 to protect the public from “risks, frauds, and swindles” and to prevent “economic losses.”
The new policy revokes Board Resolution N°144/2020, which had prohibited banks from dealing with cryptocurrencies since December 2020. This decision was the result of a collaborative effort between the Central Bank of Bolivia, the Financial System Supervisory Authority (ASFI), and the Financial Investigations Unit (UIF). The move aligns Bolivia with the Latin American Financial Action Task Force (GAFILAT)’s recommendations, which advocate for updated crypto regulations.
Despite the regulatory shift, the BCB emphasized that cryptocurrencies are not considered legal tender in Bolivia. This means businesses are not obligated to accept them as payment. The central bank highlighted this point to ensure the public understands the legal limitations of cryptocurrencies within the country.
To support this regulatory adjustment, the BCB has announced plans to include information on the risks associated with cryptocurrencies in its Economic and Financial Education Plan. This initiative aims to educate the public on safe crypto practices and potential risks.
This regulatory shift occurs against a backdrop of political and economic instability in Bolivia. Recently, the country experienced a dramatic coup attempt when rogue General Juan Jose Zuniga led soldiers to take over La Paz’s central square and attack the presidential palace. The coup was quickly quashed, and Zuniga was arrested on live TV after realizing he had little support.
The central bank stated that lifting the crypto ban is part of an effort to boost Bolivia’s struggling economy and align with Latin American crypto regulations. The new regulations permit banks to transact in cryptocurrencies via approved electronic channels, though these assets are not recognized as legal tender. Companies are not required to accept them as payment.
Under its Economic and Financial Education Plan, the BCB plans to launch an awareness program to inform the public about the risks associated with cryptocurrencies and how to manage them responsibly. This new legislation, introduced in collaboration with the UIF, ASFI, and the BCB, became effective on June 26.
The latest development comes amid the Latin American region growing out to be a very prominent crypto hub with increased adoption among masses. The percentage of global cryptocurrency in Latin America has grown from about 6 percent in 2017 to 16 percent in 2020.
As per Chainalysis, Latin America has the seventh-largest crypto economy of all regions we study, ahead of only Sub-Saharan Africa, but not far behind MENA, Eastern Asia, and Eastern Europe. As per the report, three Latin American countries rank in the top 20 of Chainalysis’ Global Crypto Adoption Index: Brazil (ninth overall), Argentina (15), and Mexico (16).
