Bolivia and El Salvador Partner to Develop Digital Currency Framework

Bolivia has entered a strategic partnership with El Salvador to advance its digital currency strategy, marking a significant step in the country’s shift toward embracing cryptocurrencies. The Central Bank of Bolivia (BCB) signed a Memorandum of Understanding (MoU) with El Salvador’s National Commission of Digital Assets (CNAD) in July 2025, aiming to develop a robust regulatory framework and infrastructure for digital assets. This partnership comes one year after Bolivia lifted its decade-long crypto ban in June 2024, which opened the door for legal recognition of digital currencies as a “reliable alternative” to traditional fiat [4].

Under the MoU, the two countries will collaborate on crypto policy development, regulatory strategy, and the exchange of blockchain intelligence tools. El Salvador, which became the first country in the world to adopt Bitcoin as legal tender in 2021, will serve as a mentor in navigating the challenges of integrating digital assets into a national financial system. The BCB emphasized the need for “safe and regulated” digital ecosystems that can attract investment and create economic opportunities, particularly for small businesses and families [4].

The timing of the partnership is significant. Bolivia has faced severe economic instability, with foreign currency reserves dropping nearly 98% over the past decade. The boliviano, the national currency, has lost much of its purchasing power, prompting many to turn to U.S. dollar equivalents, including cryptocurrencies like USDT. Daily USDT transaction volumes reached $600,000 in 2025, reflecting a rapid adoption trend [4].

Bolivian businesses, including restaurants and barbershops, are increasingly accepting Bitcoin and stablecoins as payment. Some shops even price goods directly in USDT, a shift highlighted by Tether CEO Paolo Ardoino as “quietly revolutionary.” Banco Bisa, the country’s largest bank, launched a USDT custody service in October 2024, while state-owned energy firm YPFB confirmed plans to use cryptocurrency for fuel imports [4].

Despite growing optimism, experts caution that Bolivia must carefully tailor digital asset frameworks to its unique economic and social context. Critics warn that unadapted models could lead to inequality and instability. While the MoU outlines broad cooperation goals, it lacks a detailed implementation timeline or specific regulatory milestones. Importantly, no cryptocurrency has yet been declared legal tender in Bolivia, and adoption remains voluntary [4].

The Bolivia-El Salvador alliance highlights a broader regional interest in digital finance, with Latin American countries exploring alternative monetary solutions amid economic challenges. For Bolivia, digital assets are no longer just an experiment—they are becoming a key tool in shaping a new economic landscape [4].