Bolivia Bans State Oil Company From Using Crypto for Energy Settlements

Luis Arce, the President of Bolivia, signed an executive order prohibiting the use of cryptoassets for energy purchases, aiming to curb speculation surrounding cryptocurrencies and stablecoins on exchanges like Binance.

Bolivia Issues Executive Order to Ban Crypto From Energy Settlements

Bolivia, a country that has recently shown several positive signs of integrating crypto into its payments and financial systems, has prohibited the use of crypto for settling energy-related purchases.

This measure is part of a series of economic actions aimed at curbing speculation on cryptocurrency exchanges like Binance.

Executive Order 5399, which bans YPFB, the state-owned oil company, from purchasing crypto to settle payments, was enacted on May 23 after the rise of the price of stablecoins in parallel markets as traders tried to front-run the company in a for-profit dollar trade.

President Luis Arce stated:

YPFB has not conducted any transactions with cryptoassets; however, there has been considerable speculation surrounding this issue, which affects expectations regarding the exchange rate. This measure eliminates that distortion.

YPFB President Armin Dorgathen highlighted that the company had not used cryptocurrency for these transactions for two reasons: no counterparty acceptance for these assets in the oil industry, and the lack of clear regulations to complete these exchanges.

“YPFB, today, is not using crypto assets, and it is not something we are thinking of doing in the short term; most companies still do not accept it as a form of payment, so it is unlikely that we will be able to use them as a form of payment for fuel,” he stressed.

Finally, he also stated that the volumes negotiated in national exchanges were too low and illiquid to fund the needed fuel purchases.

In March, Reuters reported that YPFB was ready to use cryptocurrency to settle energy payments due to the scarcity of foreign currency, a development allegedly confirmed by local government sources. Nonetheless, this measure eliminates any possibility of this happening at least in the short term.

Read more: Dollar-Strapped Bolivia to Rely on Cryptocurrency for Energy Imports