Bolivia Revokes Crypto Ban, Allowing Banks to Transact in BTC

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.