El Salvador has made history by becoming the first country to allow banks to operate exclusively as Bitcoin-only institutions for accredited investors. This groundbreaking move, formalized through the recent Investment Banking Law, was approved on August 8, 2025, and reflects the nation’s bold push to cement its status as a global crypto hub under President Nayib Bukele’s leadership.
The law permits private investment banks to hold Bitcoin ($BTC ) and other digital assets on their balance sheets, offering specialized services like custody, trading, and lending—denominated entirely in BTC. Targeting “sophisticated investors” (akin to accredited investors in the U.S.), these banks require a minimum capital of $50 million, aiming to attract institutional players. The move builds on El Salvador’s 2021 decision to adopt Bitcoin as legal tender and its growing BTC reserves, now valued at over $730 million.
While proponents see this as a magnet for foreign investment and a step toward financial innovation, critics caution about Bitcoin’s volatility and potential risks to economic stability, echoing IMF concerns. As the world watches, El Salvador’s Bitcoin bank experiment could redefine global finance—or test its limits.
