El Salvador plans to introduce Bitcoin banks, expanding on the 2024 Bank for Private Investment (BPI) proposal.
Regulatory frameworks remain unclear as the Technology, Tourism, and Investment Commission continues reviewing the BPI model.
The IMF raised concerns over Bitcoin volatility and transparency, while BPI approval is still pending.
El Salvador confirmed plans to introduce Bitcoin banks into its financial system, continuing its strategy to integrate digital currency into everyday finance. The announcement was made through an official government post on X, declaring, “Bitcoin Banks are coming to Bitcoin country.”
https://twitter.com/bitcoinofficesv/status/1953629383291175053
The move expands on President Nayib Bukele’s 2024 proposal to establish a Bank for Private Investment (BPI), aimed at broadening services in both Bitcoin and U.S. dollars. While the initiative remains in early stages, it signals a stronger national push towards digital finance amid limited financial access for most citizens.
Government Eyes Bitcoin-Centered Banking System
The plan involves the creation of dedicated Bitcoin banking institutions, though specific legal and operational frameworks have not yet been released. Officials have not confirmed whether these banks will fall under the proposed BPI model or adopt a separate regulatory path. Currently, the Technology, Tourism, and Investment Commission continues to assess the BPI structure.
Under the BPI proposal, banks must maintain a minimum capital of $50 million and include at least two shareholders. These institutions would have fewer regulatory constraints, enabling broader partnerships with foreign banks and greater loan flexibility. They could also register as digital asset managers and provide services tied directly to Bitcoin.
Regulatory Gaps and Institutional Concerns Remain
Although the Bitcoin banking plan aligns with El Salvador’s long-term Bitcoin adoption strategy, analysts pointed out ongoing concerns. The International Monetary Fund (IMF) has warned about Bitcoin’s volatility and the lack of consumer protection mechanisms. It also expressed concerns regarding transparency following conflicting information on recent Bitcoin transactions by the Salvadoran government.
An IMF report clarified that no new Bitcoin purchases were made under the current $1.4 billion credit agreement. Instead, recent wallet activity was due to consolidation of existing holdings. The Salvadoran government had earlier described these transfers as fresh acquisitions, raising concerns about its communication practices.
Bitcoin’s Role in National Economic Policy
El Salvador adopted Bitcoin as legal tender in 2021 and has since expanded its digital currency footprint. The country developed a government-backed Bitcoin wallet, invested in digital reserves, and launched a geothermal-powered mining project. According to official figures, national Bitcoin holdings reached a high of $767 million when the asset peaked at $123,000 last month.
Senior Bitcoin advisor Max Keiser stated that Bitcoin banking could contribute to GDP growth. Meanwhile, Ark Investment’s CEO Cathie Wood projected long-term economic benefits from the BPI model. Still, final approval for the BPI remains pending.
The government is yet to release information as to how Bitcoin banks will be operated. Until then, it is unclear whether the system will use BPI model or a new legal framework. For the time being, El Salvador’s effort to include Bitcoin in its economic landscape remains a work-in-progress by new institutional channels.
