Bitcoin Legality In Bolivia: What's The Current Status?

Bitcoin and other cryptocurrencies are not legal in Bolivia. The Central Bank of Bolivia has banned the use of any currency not issued or regulated by the government, and this includes bitcoin. This decision was first announced in 2014 and was reaffirmed by the government in 2020. However, despite the ban, blockchain believers have continued to trade in cryptocurrencies, forming networks that operate underground and using cash to avoid detection by the government.

Bolivia's Central Bank banned Bitcoin in 2014

On 19 June 2014, Bolivia's Central Bank, El Banco Central de Bolivia, issued statements formally banning any currency not issued or regulated by the government, including Bitcoin. The official policy, launched on 6 May 2014, was the first announcement by the country's central bank on the subject of digital currency.

A translation of the central bank statement reads:

> "It is illegal to use any kind of currency that is not issued and controlled by a government or an authorized entity."

The bank also stated that citizens are prohibited from denominating prices in any currency that is not previously approved by its national institutions. The ban was said to be necessary to protect the boliviano, the country's national currency, and to safeguard users from uncontrolled currencies that could lead to losses.

The decision to fully ban Bitcoin put Bolivia in a unique standing in the international community, as other nations previously believed to be embracing restrictive policies—including China, Thailand, and Russia—have since backed away from implementing similar measures. Bolivia's announcement was also unique within the context of decisions made by its South American neighbours.

The 2014 ban by Bolivia's Central Bank only prohibited the use of crypto by banks and in commercial transactions or payments. However, in 2017, Bolivian authorities arrested 60 individuals who were allegedly "undergoing training related to the investment of money in cryptocurrencies."

In 2024, Bolivia's central bank lifted its ban on Bitcoin and crypto payments, allowing financial entities to conduct transactions with digital assets in a bid to modernize its payment system. The regulatory change was made to help Bolivia elevate its struggling economy and align it with Latin American crypto regulations.

The ban includes any currency not issued or regulated by the government

Bolivia has banned the use of any currency that is not issued or regulated by its government. This includes cryptocurrencies such as Bitcoin, which are not backed by any central authority. The ban, which was implemented in 2014, makes it illegal to use or trade these currencies within Bolivia.

The Bolivian government's decision to ban cryptocurrencies was driven by a desire to protect its citizens and the national currency, the boliviano. The government cited concerns about the unregulated nature of cryptocurrencies, which could lead to financial losses for users. Additionally, they wanted to prevent scams and criminal activities that might be facilitated by anonymous transactions.

The ban has had a chilling effect on the use and adoption of cryptocurrencies in Bolivia. However, some Bolivians still trade cryptocurrencies through underground networks and in-person meetings, avoiding interactions with the traditional banking system.

Despite the ban, there is a growing community of blockchain advocates in Bolivia who are pushing for the government to change its stance. They argue that blockchain technology offers a transparent and secure alternative to traditional financial services, especially in a country with a large unbanked population and an informal economy.

While the current government is unlikely to reverse the ban, the situation is fluid, and advocates are hopeful that they can eventually persuade the authorities to embrace cryptocurrencies and the underlying blockchain technology.

Crypto advocates are pushing back against the ban

Bolivia is one of the few countries that has banned cryptocurrencies. However, the nation's blockchain advocates are pushing back against the ban.

In 2014, the Bolivian central bank, El Banco Central de Bolivia, issued a directive prohibiting the use of any currency not issued or regulated by the government, including bitcoin and other cryptocurrencies such as namecoin, peercoin, and quark. The official policy statement said:

> "It is illegal to use any kind of currency that is not issued and controlled by a government or an authorized entity."

The bank stated that the ban was necessary to protect the boliviano, the country's national currency, and to safeguard users from uncontrolled currencies that could lead to financial losses.

Despite the ban, blockchain advocates in Bolivia remain determined to change the government's position. Bolivian blockchain engineer Mario Blacutt, formerly known as "Berzeck," came out as the creator of a new blockchain network after the left-wing government that had banned crypto fell in 2019. Blacutt had previously faced repercussions for his involvement with crypto, including the closure of his bank accounts and the confiscation of his credit card.

The sentiment towards crypto in Bolivia may be slowly changing. While the interim government that replaced the left-wing regime did not lift the ban, the blockchain community in the country grew significantly in 2020. Platforms like Paxful and LocalBitcoins saw a surge in trading volume and new user registrations.

Bolivia's blockchain activists are working to educate both the people and the government about the broader applications of blockchain technology. Gabriela Melendrez, a Bolivian software engineer, founded Bolivian Mind Blockchain, a platform for learning and sharing knowledge about blockchain technology. She has been communicating with government officials to help them understand the potential benefits of blockchain.

In addition, blockchain projects are slowly gaining traction in the country. For example, a Bolivian cattle ranch is set to be tokenized to allow investors to trade physical assets digitally, and a blockchain advocate has created a gold tokenization project.

While the current government is unlikely to reverse the crypto ban, advocates remain hopeful that public education and the development of blockchain projects will eventually lead to a change in policy.

The ban may be related to concerns about scams and criminal activities

Bolivia's Central Bank, El Banco Central de Bolivia, has banned the use of any currencies not issued or regulated by the government, including Bitcoin. The bank statement reads:

> It is illegal to use any kind of currency that is not issued and controlled by a government or an authorized entity.

The ban, which was implemented in 2014, is unique in the international community, as other nations previously believed to be embracing restrictive policies have since backed away from implementing similar measures. Bolivia is the first country in Latin America to issue such extreme legislation.

In 2017, Bolivian authorities arrested 60 individuals who were allegedly "undergoing training related to the investment of money in cryptocurrencies." The country's financial authority ASFI released a statement reminding citizens that this type of activity is prohibited because it may trick Bolivians into losing their money and savings.

The central bank statement also mentions that the ban is necessary to ensure the stability and purchasing power of the national currency, the boliviano. Cryptocurrencies could be used to take money out of the economy, which the government is trying to stop.

Bolivia has a large informal economy that is not taxed or regulated by the government. The government and most Bolivians view Bitcoin as an instrument for speculation rather than a currency for international transactions. There is a perception that Bitcoin is a bubble that will eventually explode, causing harm to investors.

Bolivia's blockchain community is growing despite the ban

Bolivia's blockchain community is growing despite the country's ban on cryptocurrency. In 2022, the Central Bank of Bolivia ratified its prohibition on the use of virtual currencies, including Bitcoin. The ban, first introduced in 2014, states that any currency not issued or regulated by the Bolivian government is illegal. This has made it difficult for blockchain enthusiasts and crypto advocates in the country, some of whom have had their bank accounts shut down and have faced arrests for promoting Bitcoin.

However, the community is resilient and continues to push back against the ban. Bolivian blockchain engineer Mario Blacutt, for example, came out as the creator of a new blockchain network after the left-wing government that had banned crypto fell in 2019. The interim government that replaced it did not lift the ban, but the blockchain community visibly grew. Platforms like Paxful and LocalBitcoins saw significant increases in trading volume and new user registrations in 2020.

Bolivia's blockchain advocates are determined to change the government's position and are working to educate both the people and the government about the broader applications of blockchain technology. They argue that blockchain-based banking and cryptocurrencies can offer a much-needed alternative to traditional financial services in a country with a large unbanked population and a predominantly informal economy.

Despite the challenges posed by the ban, blockchain believers have continued to power ahead, forming underground networks and trading in cash to stay invisible to the government. They are hopeful that the government will eventually reverse the ban and recognize the potential benefits of blockchain technology and cryptocurrency for the country.

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