Momentum Builds for Bitcoin Bank Proposal in El Salvador

El Salvador's President Nayib Bukele is advocating for the establishment of private investment banks in the country, aiming to expand financing options for investors in both US Dollars and Bitcoin. This initiative, part of El Salvador's economic strategy, proposes the creation of the Bank for Private Investment (BPI), which would provide Bitcoin investors with greater access to financial services and fewer regulatory constraints compared to traditional banks.

Milena Mayorga, Salvadoran Ambassador to the United States, outlined the proposal in a June 14 post, emphasizing the BPI as a means to diversify funding opportunities for potential investors. On the same day, senior Bitcoin advisor Max Keiser noted President Bukele's swift action in introducing legislation to establish a Bitcoin Bank, citing predictions by Ark Invest CEO Cathie Wood that El Salvador's real GDP could potentially increase tenfold over the next five years.

The BPI, as reported by El Mundo, would operate under less stringent banking laws than traditional banks, allowing it more flexibility in engaging with international financial institutions and eliminating restrictions on loans. Investment banks under the BPI would also be exempt from the prohibition on extending credit or assuming risks exceeding 25% of their asset fund for the same entity.

If approved, the establishment of new private investments under the BPI would require a minimum capital of $50 million and involve at least two shareholders, who may be foreign nationals. The BPI would be authorized to transact in any legal tender, including the US Dollar and Bitcoin, and could potentially obtain licenses to offer digital asset and Bitcoin services.

Maria Luisa Hayem, El Salvador’s Minister of Economy, presented the reform proposal to the Technology, Tourism, and Investment Commission under President Bukele's guidance. However, the proposal has yet to receive legislative approval, pending further consultation and deliberation among lawmakers.