Bolivia's Crypto Ban Drives Underground Adoption Amid Economic Crisis

Bolivia maintains its prohibition on cryptocurrencies as legal tender in 2025, even as the economic crisis drives underground adoption. With 40-year-high inflation and a Boliviano that lost half its black-market value, digital assets become practical alternatives despite their illegal status. The National Tax Service (SIN) is yet to issue specific laws governing taxation related to cryptocurrencies, leaving transactions in a legal gray area. As more citizens and businesses turn to cryptocurrencies to survive, they weigh their urgent financial needs against the perception of future tax liabilities and enforcement actions.

Regulation on cryptocurrency in Bolivia is somewhat restrictive but not consistent. The National Tax Service (SIN) will control taxation over cryptocurrencies in the country; however, there will be no clearly defined laws regarding taxing cryptocurrencies in Bolivia, leaving transactions hanging in the legal gray area. The government is still keen to implement the bank prohibition against any cryptocurrency transactions, the same that was enacted in 2014. Such moves have led many activities to the informal peer-to-peer (P2P) markets. Even with that prohibition, a growing number of citizens are getting involved in cryptocurrencies to find their alternatives amid deteriorating economic conditions. Users hence operate at their own risk without having any clear regulatory framework and with uncertainty about future changes.

Since Bolivia lacks dedicated crypto tax laws, general tax principles may apply. Capital Gains Tax (CGT) may be applied to any profits earned from crypto sales with fiat or any other asset. Income Tax may be applied to all crypto profits made from mining and staking, or even fiat currency-equivalent business payments. There is no mention of Bolivia taxing crypto transactions under any form of GST.

Bolivia’s tax treatment of cryptocurrency transactions remains undefined but may fall under existing frameworks. Income Tax may constitute progressive taxation (13%-25%) on crypto earnings and is adopted according to standard personal income tax brackets. There are no separate CGTs, although profits will still be taxed under either personal income tax or corporate tax rules, as the case may be. There are no clear tax relief for crypto losses or exemptions for small transactions.

Bolivia has no formal recognition of cryptocurrency, and tax obligations remain uncertain. Therefore, while there are no specific laws regarding cryptocurrency taxes, general taxation principles may be applied to specific transactions. Notably, businesses and individuals using crypto are in a gray area in their use of crypto, since digital assets are not allowed as a legal form of payment. Profitable trades, mining/staking rewards, business transactions, and DeFi/NFTs may all trigger tax reporting requirements.

Despite growing adoption, Bolivia’s 2014 ban on financial institutions handling crypto means all transactions technically occur outside formal payment systems. This legal ambiguity creates risks for tax compliance. Since Bolivia does not yet have specific crypto tax forms, crypto clients are expected to keep comprehensive cryptocurrency transaction records in case of audits. Any income from crypto must be disclosed within the existing tax laws, following Bolivia’s tax calendar, typically with April being the deadline for filings. Such lack of clarity may result in compliance burdens where taxpayers must be expected to take the initiative to keep records of all crypto activities on their parts.

Bolivia offers no specific tax relief for cryptocurrency activities. While crypto losses currently have no clear offset mechanism against gains, business-related crypto expenses (like mining equipment or transaction fees) may qualify as deductions if properly reported as commercial income. The lack of formal guidelines leaves taxpayers without standardized crypto deduction rules. Presently, Bolivia does not have advanced systems to widely track cryptocurrencies, although perhaps authorities collect peer-to-peer exchanges of cryptocurrencies to enforce tax compliance. Taxpayers failing to report income from taxable crypto transactions properly might attract penalties under general tax laws that include fines or legal consequences involving evasion. No specific laws exist for dealing with contraventions; however, traditional tax compliance rules apply.

Bolivia’s crypto ban may ease if economic instability persists, potentially leading to formal taxation frameworks. Currently, users navigate a legal gray area – while economist José Gabriel Espinoza estimates daily USDT volumes reach $600,000, this remains small compared to the $18-22 million formal sector and $12-14 million black market. The government faces pressure to regulate as crypto adoption grows, but for now, participants balance opportunity against undefined tax risks. Although the crypto tax in Bolivia remains nebulous, such increased adoption heralds the possibility of reforms to come. Possibly, as economic pressures build, the government could more clearly grant regulations that turn cryptos into taxable but legalized financial tools rather than keeping them in gray markets. There is currently cautious optimism that balanced policies may be fortified that could ease both use and state revenues through Bolivia’s presentations for the digital economy.