El Salvador Government Proposes Bill to Enable Private Investment Banks to Offer Bitcoin Services
Prepare for a surge in Bitcoin adoption in El Salvador as the government unveils a plan to revamp banking laws and allow the establishment of banks that can provide Bitcoin and cryptocurrency services.
The proposed banking law reform was recently presented to the National Assembly's Technology, Tourism, and Investment Commission, featuring 14 new articles outlining the creation of Private Investment Banks (PIB). These banks are described as crucial tools on the global stage, promoting economic growth and facilitating the flow of financial resources into business and government ventures.
If approved, these PIBs will be authorized to offer a range of services such as economic risk management, investment management, financial product purchases, hedging, and other financial derivatives. These services will be available for any legal tender recognized in El Salvador, including the U.S. dollar and Bitcoin.
Additionally, the bill explicitly mentions support for stablecoin-based instruments, paving the way for crypto-backed investment options. However, the entry requirements for establishing a PIB are rigorous, with a mandated capital of $50 million upon formation.
Moreover, these banks will cater exclusively to "sophisticated investors," who must demonstrate ownership of at least $250,000 in assets, pass a specialized banking knowledge exam, or prove ownership of $500,000 in assets.
Despite the stringent criteria, the Salvadoran government sees the establishment of PIBs as a significant step towards bolstering the country's economic growth. In a statement, it emphasized the importance of creating a regulatory framework that supports and facilitates the operation of PIBs to drive economic progress.
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