Bolivia partners with El Salvador to boost crypto as fiat alternative

Bolivia has solidified its commitment to cryptocurrency by forming a strategic partnership with El Salvador, officially endorsing digital assets as a "reliable alternative" to traditional fiat currency. The agreement, signed on July 16, 2025, involves the Central Bank of Bolivia and El Salvador’s National Commission of Digital Assets (CNAD), and focuses on policy development, shared intelligence, and the integration of blockchain technology into financial systems. The collaboration is intended to modernize Bolivia’s financial infrastructure and expand access to banking services, particularly for small businesses and unbanked populations [1].

This partnership with El Salvador comes as the latter remains the only country in the world to have recognized Bitcoin as legal tender since 2021. Bolivia, while not adopting a similar legal stance, is exploring crypto as a tool to stabilize its economy amid a severe currency crisis. The country’s foreign exchange reserves have plummeted from $12.7 billion in July 2014 to just $165 million by April 2025, according to Trading Economics data. In response, the government has permitted the use of crypto for fuel imports and allowed banks to process Bitcoin and stablecoin transactions since June 2024 [1].

The Central Bank of Bolivia reported that crypto trading volume surged to $294 million by June 30, 2025, a significant increase from the $46.8 million recorded in the first three months after the ban was lifted. Some local businesses have even begun pricing goods in Tether (USDT), reflecting a growing shift toward crypto-based transactions as the boliviano loses value. The state-owned oil company Yacimientos Petrolíferos Fiscales Bolivianos was the first to receive government approval for using crypto in fuel imports, highlighting the practical applications being explored [1].

The Bolivian government views the partnership as part of a broader effort to diversify its financial systems and reduce reliance on the U.S. dollar. The agreement was signed by Acting Central Bank President Edwin Rojas Ulo and CNAD President Juan Carlos Reyes García, and will remain in effect indefinitely. The move is seen as a continuation of Bolivia’s pro-crypto pivot, which began with the removal of its crypto ban in June 2024 [1].

With the country’s general election scheduled for August 17, 2025, the timing of the agreement is significant. The current socialist regime has faced widespread calls for reform, and the push for crypto adoption aligns with efforts to introduce economic alternatives. However, according to crypto prediction market Polymarket, the likelihood of a candidate winning an outright majority in the first round is only 5%, suggesting a potential runoff on October 19 [1].

While the agreement outlines a long-term vision for crypto integration, it lacks specific implementation details or regulatory timelines. This suggests that the partnership is currently more symbolic and exploratory than operational. Nonetheless, it reinforces the increasing acceptance of crypto in government policy discussions and highlights the potential for digital assets to play a role in economic stabilization and development [1].

Sources:

[1] https://cointelegraph.com/news/bolivia-calls-crypto-reliable-alternative-to-fiat-in-el-salvador-partnership?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound