The country’s 2014 restriction on the usage of cryptocurrencies has ended as a result of the shift in regulatory policy. In an effort to modernise its payment system, the Central Bank of Bolivia (BCB) has lifted its prohibition on Bitcoin and other cryptocurrencies, permitting financial institutions to deal with digital assets.
According to the central bank, the action was taken to support Bolivia’s underperforming economy and bring it into compliance with Latin American cryptocurrency laws. The country’s 2014 ban on cryptocurrency use has ended thanks to a change in regulatory policy. In December 2020, Board Resolution N°144/2020 forbade banking institutions from dealing with cryptocurrencies.
Banks are now able to transact in cryptocurrencies through authorised electronic channels thanks to recently approved regulations. But BCB clarified that virtual currencies are not recognised as legitimate forms of payment.
As a result, even if cryptocurrency assets can be traded through banks, businesses are not compelled to accept them as payment because the Bolivian government does not recognise them as legal cash. As part of its Economic and Financial Education Plan, the BCB intends to develop a public awareness programme. This initiative aims to educate the public on the potential risks of cryptocurrencies and responsible cryptocurrency management.
The Financial System Supervisory Authority (ASFI), the BCB, and the Financial Investigations Unit (UIF) worked together to introduce the new legislation. The updated regulations were created by the three government agencies and went into effect on June 26.
Bolivia is now the second country in Latin America to embrace cryptocurrency as a means of bolstering its economy, as the new legislation harmonises the country’s cryptocurrency regulations with recommendations put out by the Latin American Financial Action Task Force (GAFILAT). Many Latin American countries have been facing economic challenges in the last few years, including faltering economies and rising inflation, which has compelled them to explore for other sources of income. Using cryptocurrencies, such as Bitcoin, has become one of the most well-liked aspects of the new economic paradigm.
El Salvador is the only nation in the world and the first in Latin America to have accepted Bitcoin as legal money in 2021 in addition to US dollars. Although it does not recognise cryptocurrencies as legal money, Mexico does recognise and accept them for payments and value transfers. Mexico further levies taxes on the proceeds of bitcoin sales made on centralised exchanges.
As the use of cryptocurrencies grows, Brazil is another country that has shifted to support them. The nation implemented income tax laws in 2023, permitting a 15% tax on cryptocurrency gains. Another country in Latin America, Argentina, has elected a pro-Bitcoin president in an attempt to rein in hyperinflation, emulating El Salvador’s lead.