Bolivia Abolishes Ban on Bitcoin and Cryptocurrency Transactions to Bolster Economy
Summary:
Bolivia's Central Bank has overturned its ban on Bitcoin and other cryptocurrency transactions, in an attempt to modernize its payment system and improve its economy. The newly approved regulations permit banks to transact cryptocurrencies via sanctioned electronic channels, but cryptocurrencies are not recognized as legal tender. Bolivia has aligned its crypto regulations with Latin American Financial Action Task Force's suggestions, joining several Latin American nations in resorting to cryptocurrencies to bolster their economies.
Bolivia's Central Bank (BCB) has removed its prohibition on Bitcoin and other cryptocurrency transactions, permitting financial bodies to perform transactions using digital assets. This is a step towards payment system modernization, with the intent of boosting Bolivia's faltering economy and aligning it with the cryptocurrency regulations of Latin America. The ban on cryptocurrency in the nation has been in place since 2014, and last December, the use of cryptocurrencies were prohibited by banking institutions under Board Resolution NĀ°144/2020.
Bolivia is now a part of the pro-cryptocurrency initiative in Latin America. New regulations enable banks to deal in cryptocurrencies through sanctioned electronic channels. However, the BCB stipulates that cryptocurrencies are not considered legal tender and therefore are not legally recognized by the Bolivian government. Accordingly, businesses are not mandated to accept them as a method of payment.
As part of its Economic and Financial Education Plan, the BCB seeks to implement a public awareness scheme to educate citizens about the potential risks of cryptocurrencies and how they may be responsibly managed. This new directive was initiated in partnership with the Financial Investigations Unit (UIF), the Financial System Supervisory Authority (ASFI), and the BCB, and it took effect on June 26th.
Moreover, Bolivia's cryptocurrency legislation aligns with the recommendations from the Latin American Financial Action Task Force (GAFILAT). This positions Bolivia as the latest in a string of Latin American nations turning to cryptocurrency in an effort to invigorate struggling economies.
Over recent years, several countries in Latin America have been grappling with economic instability and inflation, leading them to explore unconventional financial solutions. Cryptocurrencies, notably Bitcoin, have emerged as an appealing new economic paradigm. El Salvador made history by becoming the first and so far the only country globally to adopt Bitcoin as legal tender, alongside the U.S. dollar, in 2021. Mexico doesn't recognize cryptocurrencies as legal tender but does accept them for transfers of value and payments and also taxes profits from cryptocurrency transactions done on centralized exchanges. Brazil has adapted to the rise in cryptocurrency transactions by establishing income-tax regulations in 2023, imposing a 15% charge on cryptocurrency profit. Following El Salvador's lead, Argentina has recently elected a pro-Bitcoin president as part of their strategy to tackle their ongoing inflation issue.
Published At
6/28/2024 12:28:04 PM
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