- El Salvador authorizes investment banks to operate as Bitcoin banks.
- Banks require PSAD licenses to serve accredited investors.
- No retail services; focus on sophisticated investors.
El Salvador has announced that licensed investment banks can now fully operate as Bitcoin banks for accredited investors under the new Investment Banking Law, per statements from government officials.
This development highlights El Salvador’s ongoing integration of Bitcoin into its financial system, potentially attracting sophisticated investors and reshaping the country’s banking landscape.
El Salvador’s New Bitcoin Banking Law
El Salvador’s government now permits banks to operate as Bitcoin banks under the new Investment Banking Law. This regulatory change applies specifically to licensed private investment banks.
Investment banks can hold Bitcoin and other digital assets if they obtain a Digital Asset Service Provider (PSAD) license. This regulatory shift focuses on services for sophisticated investors only.
Immediate effects include expanded opportunities for banking institutions to incorporate Bitcoin into their operations. This policy excludes retail services, ensuring only accredited investors engage with these digital assets.
Potential financial implications include increased Bitcoin adoption in El Salvador, possibly influencing regional market dynamics. The new law aligns with El Salvador’s push to integrate digital currencies into its financial system.
Industry reactions are anticipated from financial institutions eager to diversify services. The law sets a precedence in crypto regulation within Latin America.
Insights indicate potential growth in institutional crypto services due to these regulations. El Salvador’s history of embracing Bitcoin as legal tender supports forecasts of increased institutional interest.
Juan Carlos Reyes, President, Commission for the Digital Asset Market (CNAD), El Salvador’s government crypto regulator, said “The new Investment Banking Law allows private investment banks to operate in legal tender and foreign currencies for ‘Sophisticated Investors’ and to engage in digital assets like Bitcoin with a Digital Asset Service Provider (PSAD) license. With a PSAD license, a bank could choose to operate entirely as a Bitcoin bank.”
