El Salvador has approved the Investment Banking Law, establishing a distinct regulatory framework for investment banks compared to commercial banks. This new legislation permits investment banks to hold Bitcoin (BTC) and other digital assets on their balance sheets and to offer crypto services specifically to “sophisticated investors,” a designation akin to accredited investors in the United States.
Juan Carlos Reyes, president of El Salvador’s Commission of Digital Assets (CNAD), the national crypto regulatory agency, stated, “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.”
Proponents argue that this law will encourage foreign investment and solidify El Salvador’s position as an emerging financial hub. Institutional investors have significantly contributed to El Salvador’s crypto adoption, as the country’s pro-crypto regulatory environment attracts crypto and financial firms. However, critics contend that the country’s BTC adoption and regulatory policies primarily benefit the government and large businesses, with limited advantages for the average citizen.
In a move to foster international partnerships for crypto growth, El Salvador’s President Nayib Bukele recently met with Bilal Bin Saqib, Pakistan’s state minister of crypto and blockchain. Their discussion centered on strategies for nation-state-level Bitcoin adoption and energy policies aimed at promoting crypto mining.
Bin Saqib commented on the collaboration, stating, “The cooperation is essentially based on how emerging economies that are both under the IMF program can leverage technology and other financial instruments for national growth.”
Further demonstrating its commitment to digital assets, El Salvador’s CNAD signed a memorandum of understanding with Bolivia’s central bank on July 30. This agreement aims to promote the use of cryptocurrencies as an alternative to traditional fiat currencies. This partnership comes as Bolivia faces a currency crisis marked by a scarcity of US dollars, which has complicated international trade and led to an increased use of US-dollar-denominated stablecoins as a medium of exchange, according to Tether CEO Paolo Ardoino.
