Bolivia's central bank has yet to recognise Bitcoin or other cryptocurrencies as legal tender.
Bolivia banned even banks from dabbling in crypto four years ago in the year of 2020
Photo Credit: Unsplash/ Kanchanara
The central bank of Bolivia has decided to lift a ban on payments using Bitcoin and other cryptocurrencies imposed in 2014. The country is aiming to balance its economy, while modernising its payment systems. Bolivia has become the latest Latin American country to take a pro-crypto stance, even though Bitcoin or other cryptocurrencies are yet to be recognised as legal tender in the region. The central bank will also allow banks to make crypto transactions — a restriction that was implemented in 2020.
In a statement issued on Wednesday, the Banco Central de Bolilvia announced that it was reversing its ban on cryptocurrency payments in the country, including Bitcoin transactions. The decision was made in collaboration with the Financial System Supervisory Authority (Autoridad de Supervisión del Sistema Financiero) and the Financial Investigation Unit (Unidad de Investigaciones Financieras).
According to Statista, the national debt in Bolivia is projected to increase by $21.2 billion (roughly Rs. 1,76,746 crore) between 2024 and 2029 .
The Bolivian bank has decided to let banks use approved electronic channels and facilitate crypto payments. While Bolivia's central bank has yet to recognise Bitcoin or other cryptocurrencies as legal tender, allowing these transactions could fetch the country more in remittances since cross border crypto transactions are instant and typically free of charge.
In addition, Bolivia has been taking steps to reduce its reliance on the US dollar, especially after back-to-back interest rate hikes in recent months announced by the US Fed to cope with the post-pandemic economic slump. In July 2023, Bolivia reportedly challenged the dominance of the US dollar by turning focus to the Chinese yuan and the Russian ruble.
El Salvador became the first in the world to legalise Bitcoin as a legitimate currency back in September 2021. Salvadoran president Nayib Bukele is continuing efforts to convert the country into a completely pro-BTC region, rife for crypto-related businesses to set up shops in. Brazil is another country that has taken pro-crypto steps in recent years.
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