Bolivia Not Revolutionary Enough to Tolerate Bitcoin

EspañolOn May 6, the Central Bank of Bolivia (CBB) issued resolution 044/2014, which expressly prohibits the use of any currency not issued or regulated by a state, which includes bitcoin and many other cryptocurrencies. Thus, Bolivia is the first country in Latin America to formally outlaw cryptocurrencies.

Meanwhile, bitcoin has been growing slowly but surely in the rest of the region, and finding its place in the economy of most neighboring countries. The fact that it is global and enables anonymous transactions has been crucial for its expansion to all corners of the world. Bitcoin has opened up a wide range of opportunities for entrepreneurs in extremely regulated activities, such as betting on who will win the 2014 World Cup in Brazil.

Article 1 of the document states that “With the publication of this resolution, the use of currencies not issued or regulated by states, countries, or economic areas, is prohibited, as well as electronic payment orders denominated in currencies not authorized by the Central Bank of Bolivia in the context of the national system of payments.”

Edificio del Banco Central de Bolivia en La Paz. (Wikimedia).
Building of the Central Bank of Bolivia in La Paz. (Wikimedia)

The resolution mentions virtual currencies such as “bitcoin, namecoin, tonal bitcoin, ixcoin, devcoin, freicoin, 10coin, liquidcoin, peercoin, quark, primecoin, feathercoin, and others not belonging to any state, country or economic zone.” As these are not emitted or regulated by any state, the resolution asserts they could “cause losses for their holders.”

The resolution also states that mobile wallet payments must be denominated exclusively in bolivianos, the national currency.

This decision is in line with the regulations under Article 331 of the Political Constitution of Bolivia, which states that the provision of financial services and any other “activities related to the management, use, and investment of savings is of public interest,” and can only be exercised with permission of the Bolivian state.

The document, signed by the directors of the board of the Central Bank, explains that this resolution is intended “to ensure the stability of domestic purchasing power,” which is also the stated aim of the Central Bank’s monetary policy.

But Iván Carrino, an Argentinean economic analyst, believes that national governments and central banks are primarily responsible for the loss of a currency’s value over time. “Argentina is a typical case, where the Central Bank, since its inception, has destroyed five different national currencies.”

He added that Bolivia “is also a good example, since a few years before our last hyperinflation, that country also went through that devastating economic downturn.”

In this regard, Mauro Betschart, co-founder of Moneero, a bitcoin-services company, told the PanAm Post in an exclusive interview that Bitcoin was born precisely with the objective of protecting people from the distorting monetary policies implemented by governments.

“People who live in Latin America … do not trust the government to direct monetary policy. They have suffered, among other problems, from chronic hyperinflation, banking crises, and currency restrictions,” explained the young entrepreneur.

Franco Amati, pioneer of the cryptocurrency in Argentina and cofounder of Bitcoin Buenos Aires — an upcoming bitcoin-centered venue in the heart of Buenos Aires’s downtown — explained that bitcoin is a valid currency regardless of what any particular law says. According to Amati, the true legitimacy of a currency arises from “the reality of its use and adoption in the marketplace.”

He also said that these type of measures reflect the disconnect of the Bolivian government’s views with what already is an irreversible, global trend.

“What the CBB is doing is not just an authoritarian measure that restricts the personal liberty of citizens, it also runs afoul of the regulatory frameworks being implemented in the rest of the world. Countries such as Australia, the United States, and Germany, have launched transparent legal frameworks, and even guidelines on how to file taxes for people who use bitcoin. Only Iceland and Vietnam have taken measures similar to Bolivia’s.”

Bitcoin Buenos Aires, Amati’s project, will be a gathering point for the Argentinean bitcoin community, and will feature a training center and office facilities for bitcoin companies such as BitPay and BitPagos.

Resolution of the Central Bank of Bolivia

Translated by Alan Furth.

Subscribe free to our daily newsletter
Sign up here to get the latest news, updates and special reports delivered directly to your inbox.
You can unsubscribe at any time