El Salvador approves law for investment banks in cryptocurrencies

The assembly of El Salvador approved a new law that allows large financial institutions to apply for licenses to offer services with Bitcoin and other digital assets. These services are aimed at "sophisticated investors," meaning those with more than $250,000 in liquid assets.

The new legislation allows institutions with a minimum capital of $50 million to qualify as investment banks. These banks will then be able to offer financial instruments related to cryptocurrencies.

How does the new legislation work?

Although the categories of cryptocurrency licenses (such as Bitcoin service provider and digital asset issuer) already exist, the new law allows investment banks to add these licenses to their existing banking license. In practice, this enables well-capitalized institutions to hold Bitcoin, issue tokens, and structure cryptocurrency businesses within the current licensing regime.

Representative Dania González stated that this measure expands the financial architecture of the country, complementing the traditional banking system with a new regulated and supervised entity. The initiative is supported by the Ministry of Economy of El Salvador.

Focus on institutional investors and the overall landscape

The new law marks a shift in focus, prioritizing institutional capital over retail investors. Although El Salvador made the use of Bitcoin mandatory for payments in 2021, the country had to roll back some regulations in early 2025 to secure a $1.4 billion line of credit from the International Monetary Fund (IMF).

Despite the initial effort for Bitcoin adoption, analyses show that acceptance among Salvadoran citizens is still low: only 1% of remittances involve crypto assets and only 2 in 10 Salvadorans claim to have adopted cryptocurrencies.