Bolivia’s Central Bank Endorses Crypto as Viable Alternative, Signs MoU with El Salvador
In a significant move that underscores its pivot toward cryptocurrency adoption mirroring an existing Central American neighbor, Bolivia’s top financial institution has formally recognized digital currencies as a “viable and reliable alternative” to traditional fiat money. This endorsement comes as the Central Bank signed a Memorandum of Understanding (MoU) with El Salvador’s National Commission of Digital Assets (CNAD).
The agreement facilitates cooperation on policy development and aims to pool crypto intelligence tools. The stated objectives are to modernize Bolivia’s financial system and enhance financial inclusion for households and small businesses, according to a communication released by the central bank on Wednesday.
The pairing of Bolivia with El Salvador is noteworthy given that the latter became the world’s first country to designate Bitcoin as legal tender back in September 2021. The collaboration could serve as a dual-edged learning experience for Bolivia, offering insights into the potential economic and regulatory hurdles encountered, while simultaneously highlighting the intelligence and resources El Salvador may have gathered.
Immediate Effect and Context for Bolivia’s Crypto Pivot
The MoU, effective immediately with an indefinite duration, was signed by Bolivian Acting Central Bank President Edwin Rojas Ulo and El Salvadoran CNAD President Juan Carlos Reyes García. Speaking of Bolivia’s current crypto stance, Rojas Ulo characterized it as being in a “transition phase.”
This partnership adds considerable weight to Bolivia’s rapidly developing embrace of crypto. This shift began significantly in June 2024 when Bolivia rescinded its longstanding crypto prohibition, permitting banks to process Bitcoin (BTC) and stablecoin transactions, thereby opening the financial system to this asset class.
Boosted Trading Volumes Post-Lift Ban
Only three months after the ban was lifted, the central bank reported impressive results: crypto trading volume surged to $46.8 million by early August, averaging a substantial $15.6 million per month. This figure doubled the previous average over the preceding eighteen months, indicating robust uptake.
Volume patterns continuing into 2025 further demonstrate this growth. By June 30 of that year, according to the central bank’s subsequent report, overall crypto trading activity had climbed substantially to $294 million.
Addressing a Currency Crisis
Bolivia’s drive toward crypto policy normalization represents an adaptive strategy amid a severe foreign exchange shortage. State-owned oil and gas company Yacimientos Petrolíferos Fiscales Bolivianos obtained government authorization in March to accept crypto payments for fuel imports.
This initiative aims to offset persistent US dollar scarcity which severely hampers import capacity.
Fiscal data paints an alarming picture of Bolivia’s currency stability: foreign exchange reserves have plunged 98% from $12.7 billion in July 2014 down to a reported $165 million just four months earlier in April (the article specifically mentions “April,” requiring confirmation or source verification).
Some segments of the economy are already adapting. Reports indicate that certain Bolivian shops have begun quoting essential goods prices in Tether (USDT) stablecoins, suggesting a growing informal utilization of crypto as a hedge against the peso’s depreciation and means to manage the currency crisis.
Political Timing: Elections loom
The announcement also comes before a critical political juncture with elections scheduled for August 17. Widespread aspiration exists across the nation for an end to the controversial socialist administration that assumed power six decades ago and remains in place.
If no single candidate achieves over 50%, or otherwise meets the threshold requiring a runoff (40% votes with a 10-point margin over the runner-up), a second-round vote will occur on October 19. Current odds for a single candidate winning outright, according to the crypto market predictions platform Polymarket, stand at only 5%, reflecting deep uncertainty.
