Bolivia Embraces Crypto in Landmark Deal with El Salvador Amid Currency Crisis

Bolivia has signed a memorandum of understanding with El Salvador in an effort to boost its economy and financial system. The South American country is going through a terrible financial crisis, and this partnership shows that the government is changing its mind about using cryptocurrencies. The Central Bank of Bolivia used to have a stringent restriction on digital assets, but now it says that crypto is a "viable and reliable alternative" to regular money.

Bolivia Partners with El Salvador for Crypto Adoption

The announcement was made after the Bolivian officials formalized the partnership with El Salvador’s National Commission of Digital Assets (CNAD). El Salvador was the first country in the world to adopt Bitcoin as a legal tender, and Bolivia is hoping to follow in its footsteps.

The agreement is signed by Edwin Rojas Ulo, the Acting President of the Central Bank of Bolivia and CNAD President Juan Carlos Reyes García. The aim is to foster regulatory strategies, information-sharing tools, and crypto policy development. The pact takes effect immediately and is set to continue indefinitely.

The collaboration with El Salvador was part of Bolivia’s decision to lift the ban on crypto back in June 2024. Thanks to this partnership, the country will authorize banks that will handle transactions involving Bitcoin (BTC) and stablecoins.

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In just three months following the policy reversal, the Central Bank of Bolivia recorded crypto trading volumes of $46.8 million, more than double the average monthly volume over the previous 18 months. That momentum continued into 2025, with total volume reaching $294 million by the end of June.

The bank emphasized the partnership with El Salvador as a strategic opportunity to learn from the Central American country’s pioneering experience with Bitcoin, especially in navigating potential regulatory, technical, and economic hurdles.

Bolivia is embracing crypto at the perfect moment. The country is currently going through a historic decline in foreign currency reserves. According to Trading Economics, the reserves have dropped by 98% from $12.7 billion in 2014 to just $165 million in April 2025. This has sparked severe shortages of U.S. dollars, hindering imports and raising alarm over the future of the Bolivian people.

In response, the Bolivian government recently authorized its state oil company, Yacimientos Petrolíferos Fiscales Bolivianos, to use cryptocurrency for fuel imports. Some shops in Bolivia have even begun listing prices in Tether (USDT), a stablecoin pegged to the U.S. dollar, as citizens seek alternatives to their weakening local currency.

Despite the Bolivian boliviano remaining the primary medium of exchange, public trust is eroding. Many Bolivians have moved their money into more reliable international assets, like bitcoin, since they are worried about inflation and their buying power.

The crypto cooperation happened just a few weeks before Bolivia's important general election on August 17. The country has been led by socialists since 2005, but a political transition could happen soon that would transform the way it does business.