Bolivia's incoming president Rodrigo Paz is betting on blockchain technology to root out corruption in government procurement, marking a dramatic policy shift for a country that until last year banned cryptocurrency entirely.
Paz, who won Sunday's runoff election with 54.5% of the vote against conservative rival Jorge Quiroga, will take office November 8 inheriting an economy ravaged by fuel shortages, 40-year high inflation and a staggering 98% collapse in foreign currency reserves.
The 58-year-old senator's Christian Democratic Party secured narrow majorities in both chambers of Congress, giving him room to pursue an ambitious reform agenda.
Blockchain as Anti-Corruption Tool
The centerpiece of Paz's digital governance strategy involves deploying blockchain technology and smart contracts in public procurement. According to the Partido Demócrata Cristiano's official government platform, the incoming administration plans to apply blockchain technologies to "eliminate discretion in all public purchasing processes."
The proposal aims to create a transparent, decentralized digital system where government contracts are recorded on an immutable ledger, making manipulation significantly harder. Smart contracts — self-executing agreements with terms directly written into code—would automate procurement stages including bidding, evaluation and payments, reducing opportunities for human interference.
Public procurement corruption remains a persistent challenge in developing nations. Research indicates that in many countries, the diversion of public money through procurement represents the majority of government corruption, with fraud often centering around inadequate record-keeping and low accountability.
Paz's blockchain push doesn't make Bolivia a "Bitcoin nation." Unlike El Salvador's embrace of Bitcoin as legal tender, the incoming president takes a pragmatic approach, viewing blockchain primarily as a transparency tool rather than a monetary revolution.
Crypto Asset Declaration Fund
The administration's second major crypto initiative involves allowing citizens to declare cryptocurrency holdings as part of a new foreign-exchange stabilization fund. This asset regularization program, explicitly including crypto, aims to capitalize a reserve pool used to steady the currency and pay for essential imports when US dollars are scarce.
Foreign exchange stabilization funds serve as critical shock absorbers for economies facing currency crises. By broadening eligible assets to include cryptocurrency, Bolivia's government can potentially tap into a wider pool of capital while bringing previously undeclared holdings into the formal economy.
The proposal gives Paz's administration flexibility to either hold crypto assets or convert them to hard currency without maintaining exposure to volatile tokens — a pragmatic middle ground between crypto enthusiasm and regulatory caution.
From Ban to Boom
Bolivia's blockchain plans emerge against the backdrop of a remarkable cryptocurrency policy reversal. Just over a year ago, the country maintained one of Latin America's strictest crypto prohibitions.
In June 2024, Banco Central de Bolivia lifted a decade-old ban on cryptocurrency transactions, authorizing regulated financial institutions to handle digital assets through approved electronic channels. The central bank reported that average monthly crypto trading doubled within months, reaching $15.6 million monthly between July and September 2024.
The crypto surge accelerated dramatically. By June 2025, Bolivia recorded total crypto volumes of $430 million — a 630% year-over-year increase driven by economic instability, including severe dollar shortages and inflation approaching 25%.
Real-World Adoption Takes Hold
Bolivia's crypto transformation moved from trading floors to showrooms. In September 2025, major automotive distributors including Toyota, Yamaha and BYD began accepting Tether's USDT stablecoin for vehicle purchases — a watershed moment for mainstream cryptocurrency adoption in the region.
Dealership billboards now promote "Tu vehículo en dólares digitales" (Your vehicle in digital dollars), positioning USDT as a fast, simple and secure payment option. Tether CEO Paolo Ardoino described the development as evidence that USDT functions as a "digital dollar for hundreds of millions in emerging markets."
The merchant adoption followed institutional moves. In October 2024, Banco Bisa launched USDT custody services for clients — the first among Bolivian banks — allowing customers to buy, sell and transfer the stablecoin through regulated channels with daily limits up to $10,000.
Even state-owned enterprises joined the shift. In March 2025, Bolivia's national oil company YPFB received government authorization to use cryptocurrency for fuel imports, addressing critical supply chain challenges amid the dollar shortage.
Regional Partnership
On July 31, 2025, Bolivia's central bank signed a memorandum of understanding with El Salvador's National Commission of Digital Assets, calling cryptocurrency a "viable and reliable alternative" to traditional currencies. The indefinite agreement enables knowledge sharing on blockchain intelligence tools, regulatory frameworks and risk analysis.
The partnership positions Bolivia to learn from El Salvador's experience as the first country to adopt Bitcoin as legal tender in 2021, while avoiding some of the Central American nation's early implementation challenges. Both nations committed to promoting digital asset use particularly for families and small entrepreneurs underserved by traditional banking.
Acting President of Banco Central de Bolivia Edwin Rojas Ulo emphasized the collaboration aims to "modernize Bolivia's financial system and deepen financial inclusion" through regulated cryptocurrency ecosystems.
Economic Crisis Drives Change
Bolivia's cryptocurrency embrace stems from economic desperation rather than ideological commitment. The country's foreign exchange reserves plummeted from $12.7 billion in July 2014 to just $171 million by August 2025 — a catastrophic 98% collapse that paralyzed imports and triggered widespread fuel shortages.
Natural gas revenues, once the engine of Bolivia's economy, fell from $6.1 billion in 2013 to $1.6 billion in 2024 as former President Evo Morales chose not to expand the gas sector during his 2006-2019 tenure. The revenue collapse left successor administrations scrambling for alternatives.
Cryptocurrency adoption surged as Bolivians sought shelter from currency instability. With the boliviano losing purchasing power and official dollar supplies dwindling, stablecoins emerged as practical alternatives for preserving value and conducting cross-border transactions.
Challenges Ahead
Paz takes office with significant hurdles. While his party holds slim majorities in both legislative chambers, implementing blockchain procurement systems and managing a crypto-inclusive stabilization fund will require technical expertise, regulatory clarity and political will.
The president-elect must also balance crypto pragmatism against concerns about financial stability, money laundering and consumer protection. Bolivia's regulatory framework remains under development, and the country lacks comprehensive tax policies for cryptocurrency transactions.
Former Central Bank President Jose Gabriel Espinoza cautioned that Bolivia's crypto surge "isn't a sign of stability — it's more a reflection of the deteriorating purchasing power of households." The comment underscores that while cryptocurrency provides short-term relief, addressing Bolivia's underlying economic crisis requires broader reforms.
Paz has pledged to phase out costly fuel subsidies, modernize state-owned enterprises and restore macroeconomic stability — ambitious goals that could face resistance from labor unions and political opposition. His blockchain and crypto initiatives offer potential tools for transparency and financial flexibility, but success ultimately depends on execution.
Latin American Crypto Landscape
Bolivia's policy evolution reflects broader Latin American trends. Argentina, battling inflation above 100%, has seen citizens embrace stablecoins as wealth protection. Brazil maintains steady crypto growth through clear regulations and a dynamic fintech sector. Colombia and Mexico similarly show rising adoption driven by currency volatility and limited access to dollar banking services.
The Chainalysis Global Crypto Adoption Index shows Latin America's crypto adoption climbed from 53% in 2024 to 63% year-over-year, cementing the region's status as one of cryptocurrency's fastest-expanding markets. Between July 2023 and June 2024, Latin America processed nearly $415 billion in digital assets, capturing 9.1% of global cryptocurrency value.
Three Latin American nations — Brazil, Venezuela and Argentina — ranked among 2025's top 20 crypto adopters globally, reflecting the region's growing embrace of digital assets as practical economic tools rather than speculative investments.
As Paz prepares to take office, his blockchain-based anti-corruption strategy and crypto-inclusive stabilization fund represent a calculated bet that digital technologies can help rebuild trust in government while addressing Bolivia's economic crisis. Whether this approach succeeds will shape not just Bolivia's future, but potentially influence cryptocurrency policy across the developing world.