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Is Legal Tender Status Like El Salvador? ⋆ ZyCrypto
Bolivia lifts long-standing ban Bitcoin and other cryptocurrencies, marking a pivotal moment for the country’s financial landscape.
According to an announcement on Wednesday, June 26 from the country’s central bank, Banco Central de Bolivia, the country will allow banks to transact with digital assets.
Notably, Bolivia’s cryptocurrency ban dates back to 2014, aimed at protecting the country’s financial system from potential risks associated with digital currencies. However, evolving economic challenges and a change in regional attitudes towards cryptocurrencies have prompted a reconsideration of this policy. In December 2020, the government reaffirmed its stance against cryptocurrencies, banning banking institutions from transacting in digital currency.
The latest regulatory change allows Bolivian banks to process cryptocurrency transactions through approved electronic channels. According to an announcement, the decision was part of a broader effort to modernize the financial system and stimulate the economy.
That said, it is however important to note that despite this new freedom for financial institutions, cryptocurrencies have not been granted legal tender status. This means that while transactions can take place, businesses are not required to accept cryptocurrencies as a form of payment.
Bolivia’s move is partly driven by the need to boost its struggling economy. Interestingly, the decision to lift the Bitcoin ban came just days after the country successfully thwarted a coup attempt, fueled in part by its economic woes.
By integrating cryptocurrencies into its financial system, Bolivia hopes to attract investment and offer new financial tools to its citizens. According to the announcement, the central bank plans to launch an economic and financial education plan aimed at informing the public about cryptocurrencies. This initiative will highlight the potential risks of digital currencies and promote responsible use, addressing concerns about volatility and security.
That said, Bolivia’s change brings the country closer to El Salvador, which became the first nation to adopt Bitcoin as legal tender in 2021 to fight inflation and attract foreign investment. Across Latin America, countries like Mexico and Argentina, which recently elected a pro-Bitcoin president, increasingly view cryptocurrencies as solutions to economic challenges. Ecuador is now the only country in Latin America to ban cryptocurrency payments.
Although Bolivia has not granted Bitcoin legal tender status like El Salvador, the question remains whether it could follow suit in the future. However, market participants have, expressed optimism coining the term “slowly, then suddenly,” suggesting that Bolivia might eventually adopt similar measures.