Bolivia’s state-run energy company, YPFB, is looking to utilize cryptocurrency for its energy import payments, as reported on March 13. This initiative arises amid the country’s struggle with a shortage of foreign currency reserves and a declining domestic gas supply.
A representative from YPFB indicated that a system had been established for utilizing cryptocurrency to facilitate energy imports following government approval for digital asset use to satisfy national energy demands. Although the system has not yet been implemented, there are intentions to activate it soon.
Details about the specific cryptocurrency to be used for these transactions have not been disclosed. Typically, stablecoins—digital currencies tied to fiat money—are utilized for international payments; however, it remains uncertain if Bolivia will follow this practice.
The fuel crisis in Bolivia has prompted protests and threats of strikes among various groups, including farmers who argue that the fuel shortages jeopardize their summer harvests. Currently, only between 35% and 50% of the public transportation system is operational. Alejandro Gallardo, the minister of energy and hydrocarbons, acknowledged the difficulties caused by the lack of foreign currency.
The YPFB representative explained that the new purchasing framework aims to bolster national fuel subsidies amid the foreign currency shortages, declaring, “From now on, these (cryptocurrency) transactions will be carried out.”
Increase in Crypto Adoption in Bolivia
In June 2024, Bolivia’s central bank lifted its previous prohibition on Bitcoin and crypto payments, permitting financial institutions to engage with digital currencies. This ban had been in effect since 2014.
By September 2024, Bolivia documented a 100% surge in virtual asset trading, with approximately $15.6 million worth of assets exchanged monthly from July to September. The total of $48.6 million in trades primarily encompassed stablecoins, which are frequently employed in developing nations facing significant local currency devaluation or foreign currency deficits.
Stablecoin usage further accelerated in Bolivia in October 2024 when Banco Bisa, a local bank, launched a stablecoin custody service. This initiative, endorsed by the country’s financial authority, enables residents to buy, sell, and trade Tether’s USDt, a stablecoin pegged to the US dollar.
In the past, it was highlighted that Bolivia stood to benefit significantly from embracing cryptocurrencies. At one point, a considerable portion of the population was unbanked, with just a small percentage of residents utilizing debit and credit cards for transactions. However, despite recognizing the potential advantages, the country upheld its ban until 2024, having previously labeled cryptocurrency as a pyramid scheme and detaining advocates for digital currencies.