Bolivia rolls back Bitcoin ban, legalises crypto transactions for banks

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Bolivia’s central bank has decided to lift a ban on payments using bitcoin and other cryptocurrencies that was imposed in 2014. The country is aiming to balance its economy as well as modernize its payment systems. Bolivia becomes the latest Latin American country to take a pro-crypto stance, even though bitcoin or other cryptocurrencies are not yet recognized as legal tender in the region. The central bank will also allow banks to conduct crypto transactions – a ban that was implemented in 2020.

Bolivia’s new stance on cryptocurrencies and crypto transactions

In a statement released on Wednesday, the Banco Central de Bolivia announced that it was reversing its ban on cryptocurrency payments, including bitcoin transactions, in the country. The decision was taken in collaboration with the Financial System Supervisory Authority (Autoridad de Supervisión del Sistema Financiero) and the Financial Investigations Unit (Unidad de Investigaciones Financieras).

According to Statista, the national debt in Bolivia is projected to rise by $21.2 billion (roughly Rs. 1,76,746 crores) between 2024 and 2029.

The Bank of Bolivia has decided to allow banks to use approved electronic channels and facilitate crypto payments. Although Bolivia’s central bank has not yet recognized bitcoin or other cryptocurrencies as legal tender, allowing these transactions could help the country gain more leverage in remittances since cross-border crypto transactions are instant and usually free.

In addition, Bolivia is taking steps to reduce its dependence on the US dollar, especially after the successive interest rate hikes announced by the US Fed in recent months to combat the post-pandemic economic downturn. In July 2023, Bolivia reportedly challenged the dominance of the US dollar by focusing on the Chinese yuan and the Russian ruble.

Other countries in Latin America are doubling down on crypto

In September 2021, El Salvador became the first country in the world to legalize Bitcoin as a legal tender. Salvadoran President Nayib Bukele continues efforts to turn the country into a completely pro-BTC region, suitable for crypto-related businesses to set up shops. Brazil is another country that has made pro-crypto moves in recent years.

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