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Private Financial Institutions in El Salvador Permitted to Manage and Utilize Bitcoin and Other Cryptocurrencies
El Salvador enacted legislation permitting private investment banks to maintain Bitcoin and other digital assets on their balance sheets and offer cryptocurrency services to qualified investors.
The Legislative Assembly of El Salvador ratified the Investment Banks Act, which designates them as a distinct category with varying regulatory obligations compared to commercial banks. Under this law, investment banks are permitted to engage with digital assets upon acquiring the necessary license.
The new regulations establish that the minimum criteria for investment banks in the nation include a share capital of no less than $50 million. Furthermore, clients eligible to access the services of these banks must possess free assets totaling at least $250,000. Such client assets may comprise cash or easily liquidated items, including Bitcoin, stablecoins, tokenized bonds, gold, and others.
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The legislation also specifies that the roles of investment banks in El Salvador will encompass:
- issuing and placing securities;
- facilitating mergers and acquisitions;
- providing consulting for large-scale projects;
- conducting P2P financing transactions;
- operating with digital assets under a digital asset service provider (PSAD) license.
Deputy Dania González stated that the new legislation paves the way for the establishment of private “Bitcoin banks” in the nation, which will be entirely dedicated to digital asset activities. She emphasized that this initiative will primarily benefit El Salvador by drawing in international private capital, enabling investment funds and major investors to utilize national frameworks as regional operational platforms. The official further mentioned that this measure aims to enhance El Salvador’s role as a new financial services center for institutional clients.
El Salvador is actively pursuing international collaboration in the cryptocurrency sector since it adopted Bitcoin as legal tender in September 2021. For instance, the country’s National Commission of Digital Assets (CNAD) recently entered into an agreement with Banco Central de Bolivia (BCB) to share expertise.
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