El Salvador Government Unveils Plan to Integrate Bitcoin Services into Private Investment Banks
A new era of Bitcoin utilization is on the horizon in El Salvador. The government of El Salvador has put forth a proposal to amend the existing banking laws to establish a specialized type of bank that can offer cryptocurrency services, including Bitcoin.
The proposed banking law amendment was introduced to the Technology, Tourism, and Investment Commission of the National Assembly on June 13, featuring 14 new provisions that define Private Investment Banks (PIB) as “an essential tool on the global stage to foster economic development and facilitate the flow of financial resources towards commercial and government ventures.”
If ratified, this initiative will pave the way for the establishment of these banks that can provide various services, such as financial risk management, acquisition of financial products, investment portfolio management, hedging, and other financial instruments. These services will be compatible with any legal tender in El Salvador, including the U.S. dollar and Bitcoin.
Moreover, the bill explicitly permits the use of stablecoins-based instruments, ushering in the possibility of crypto-based investment tools. However, the prerequisites for launching a PIB are demanding: firms must have a starting capital of $50 million.
Additionally, these banks will not cater to all Salvadorans, as their services will be targeted towards “sophisticated investors.” These individuals must demonstrate ownership of assets worth at least $250,000 and pass a specialized banking knowledge assessment, or prove ownership of assets totaling $500,000.
Nevertheless, the Salvadoran government views these institutions as crucial for advancing the country’s economic growth. In a press statement, it emphasized the importance of establishing the regulatory framework that supports and facilitates the establishment and operation of PIBs to stimulate economic development.
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