Though this news came the last month when on May 6, the Central Bank of Bolivia (CBB) issued resolution 044/2014 wherein it expressly prohibited the use of any currency not issued or regulated by a state, it looks actions on it started just a couple of days ago. With the resolution, the government has tried to use its iron hand to hammer the most innovative monetary solutions in history.
Bitcoin companies have been of the opinion that overall the governments in Latin America are favorable for Bitcoin; however, now as Bolivia has become the first country in Latin America to formally outlaw cryptocurrencies, many other governments may think for it. In addition to Bitcoin, the ban is also on other cryptocurrencies including Namecoin, Peercoin, Quark, primecoin and feathercoin.
According to Article 1 of the document 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.
The imposition of ban has astonished many, particularly the ones who think that Bitcoin and other digital currencies can be the right option for the economy of Latin American countries as they are the net gainers. First the customers don’t need to pay higher processing fees and second it is one better option than the US dollars for many Latin Americans.
Digital Currencies Not Regulated and Generated by Sovereign Powers
The resolution mentions virtual currencies are not emitted or regulated by any state, and therefore, could cause losses for their holders. Though this danger has also been used by various other governments but many of them just issued the warning and did not ban the digital currency outright.
This is one of such cases wherein the reason is being used to justify the ban. Apart from condemning the digital currencies, the resolution clarifies that mobile wallet payments must be denominated exclusively in bolivianos, the national currency.
The decision by the government of Bolivia has come under its Article 331 of the Political Constitution of Bolivia according to which the government can impose any reasonable restrictions on public interest.
The government says that the measure it took is aimed to ensure the stability of domestic purchasing power.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org