El Salvador backs Bitcoin bank proposal to broaden investment channels

The core goal of the El Salvador Bitcoin Bank proposal is to provide U.S. dollar and Bitcoin investors with a diverse range of financing options to enhance the flexibility and attractiveness of the financial system, thereby promoting innovation and growth in the country’s economy.

El Salvador aims to promote the construction of Bitcoin banks

El Salvador’s President Nayib Bukele, a staunch supporter of Bitcoin, has proposed establishing a private investment bank (BPI) in the country to provide financial services to Bitcoin (BTC) and other U.S. dollar investors , and enjoy fewer restrictions than traditional banks.

Milena Mayorga, El Salvador’s ambassador to the United States, said on X social media on June 14: “As part of our economic plan for El Salvador, we propose the creation of a private investment bank to provide potential U.S. dollar and Bitcoin investors with diverse financing options.”

Max Keizer, the president’s senior Bitcoin adviser, added on the same day: “President Booker is actively pushing for new legislation to establish a Bitcoin bank during his new term.” He also mentioned that Ark Invest CEO Official Cathie Wood predicts that El Salvador’s real GDP could grow 10 times over the next five years, and the creation of a Bitcoin bank will make this prediction more likely.

Nayib Bukele was recently sworn in for a second five-year presidential term

Just two weeks ago, Bukele was sworn in as president for a new five-year term after winning a landslide election in February.

Private investment banks will relax restrictionsFinancial innovation

According to El Mundo, the planned private investment bank (BPI) in El Salvador will enjoy a more relaxed legal environment than traditional banks. The bank is not subject to restrictions on working with overseas banks or financial firms with ties to shareholders or business groups. In addition, lending restrictions faced by traditional banks will also be lifted here at BPI.

The June 14 report further clarified that BPI will not be legally bound by excessive lending to a single client, that is, it will not be restricted from "providing credit or assuming risk to the same person in excess of 25% of the assets of the fund." The relaxation of this policy provides BPI with greater financial flexibility.

According to the proposal, if BPI is approved, it must have a registered capital of at least US$50 million and at least two shareholders, who can even be foreign investors. At the same time, the proposal emphasizes that BPI will be allowed to operate using any fiat currency, including US dollars and Bitcoin, and may be approved to become a provider of digital assets and Bitcoin services.

According to reports, El Salvador’s Minister of Economy Maria Luisa Hayem Hayem has proposed this reform plan to the Technology, Tourism and Investment Committee led by President Nayib Bukele. However, this reform package has not yet been approved. However, reports highlight that lawmakers have not yet agreed to convene officials to discuss the project’s goals or bring it to committee for a vote.

Although, BPI’s proposal reflects El Salvador’s innovative attempts in the financial field and its openness to digital assets such as Bitcoin. However, the final implementation of this proposal still needs to be reviewed and approved by the El Salvadoran Legislature.

Conclusion

El Salvador’s President Booker’s positive attitude towards Bitcoin and promotion of the Bitcoin bank proposal show the country’s openness and forward-lookingness in financial innovation. Although the private investment bank proposal still needs to be approved by the legislative process, its potential financial service capabilities and inclusiveness of Bitcoin provide new perspectives and opportunities for global investors. As El Salvador continues to explore the Bitcoin field, its economic development prospects and stance on cryptocurrencies deserve the world’s attention.

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