El Salvador has made a landmark move to stimulate its financial sector by approving a new Investment Banking Law. This legislation redefines the regulatory framework, distinguishing investment banks from traditional commercial banks, and enables them to hold Bitcoin (BTC) among other digital assets on their balance sheets.
Under the updated law, investment banks—institutions capable of underwriting companies and issuing securities—can now provide cryptocurrency services to “sophisticated investors,” comparable to accredited investors in the U.S. This move is a significant step in integrating Bitcoin into mainstream financial activities in El Salvador.
Juan Carlos Reyes, head of the Commission of Digital Assets (CNAD), the government’s crypto regulatory authority, highlighted that banks with a Digital Asset Service Provider (PSAD) license can operate fully as Bitcoin banks, offering both legal tender and foreign currency transactions. This creates new opportunities for private investment banks to engage directly in the digital assets space.
The law is designed to allure foreign investment by positioning El Salvador as an emerging finance hub focused on crypto innovation. The country’s conducive regulatory climate has already attracted institutional investors and numerous crypto businesses, fueling the nation’s pioneering approach to Bitcoin adoption.
However, some critics argue that the benefits primarily favor governments and big firms, with limited direct impact on everyday citizens.
International Partnerships to Boost Crypto Development
El Salvador’s president, Nayib Bukele, recently met with Pakistan’s state minister for crypto and blockchain, Bilal Bin Saqib. Their discussions covered strategies for national-level Bitcoin adoption and policies to enhance crypto mining using energy efficiently. The collaboration focuses on leveraging technology and financial tools to foster national economic growth among emerging economies under IMF programs.
Additionally, the Central Bank of Bolivia signed a memorandum with CNAD to promote cryptocurrency use as a reliable alternative to fiat currency. With a currency crisis limiting access to U.S. dollars, Bolivia is exploring stablecoins pegged to the dollar for facilitating international trade.
Tether CEO Paolo Ardoino noted a rising demand for USD-denominated stablecoins in the region, emphasizing their role in trade and financial inclusion during monetary constraints.
Related read: El Salvador’s national Bitcoin chief actively promotes Bitcoin adoption in Argentina, expanding crypto influence across Latin America.
