Bitcoin Banking Legislation in El Salvador: Loan Provision, Deposit Acceptance, and Banking Activities Now Permitted
El Salvador's Bitcoin Journey Continues Amidst IMF Constraints
El Salvador, a small Central American nation, has made significant strides in its bid to establish a Bitcoin-focused banking system. In mid-2025, the country passed an 'Investment Banking Law' that authorises select investment banks to offer Bitcoin services, marking a significant step towards this goal [1][3][5].
The new law allows for specialized banks to engage in activities such as trading, custody, issuance, and digital asset management, all under the watchful eye of national regulators like the Central Reserve Bank and the Superintendency of the Financial System. This framework targets sophisticated investors with liquid assets above $250,000, enabling engagement with Bitcoin, tokenized gold, and treasury bonds [1][4].
The government has also announced plans for Bitcoin Banks, potentially the first banks globally built around Bitcoin infrastructure. These banks would offer BTC-based financial services like lending, savings, and payments. To operate, they would need a minimum capital of $50 million and at least two shareholders, with flexible regulatory frameworks to attract international financial players [3][5].
Despite these ambitious plans, El Salvador faces challenges. In December 2024, the country secured a $1.4 billion loan from the International Monetary Fund (IMF) with conditions requiring it to end Bitcoin's legal tender status, stop accumulating more Bitcoin, make Bitcoin usage optional rather than mandatory, reduce government control over the Chivo Bitcoin wallet, and improve transparency [1][2].
As a result, Bitcoin purchases by El Salvador were halted in February 2025, raising questions about the country's ongoing Bitcoin strategy [2]. The IMF and financial analysts have also expressed concerns about the volatility of Bitcoin, the need for clear regulatory frameworks for Bitcoin banking, and the necessity of public trust for sustainable success [5].
El Salvador has not been deterred, however. The country has established a joint agreement with Pakistan to advance crypto collaboration and signed a memorandum of understanding with Bolivia to facilitate mutual cooperation in crypto policy development [6]. Despite the ban on Bitcoin's legal tender status, El Salvador continues to announce new Bitcoin purchases [7].
In summary, El Salvador's Bitcoin-focused banking system evolution will likely hinge on balancing innovation with regulatory compliance and economic stability. The country continues to push forward, navigating the tighter constraints imposed by the IMF loan agreement and global financial scrutiny [1][3][5].
References:
- El Salvador to allow specialized investment banks to offer Bitcoin services
- El Salvador halts Bitcoin purchases amid IMF pressure
- El Salvador plans to launch the world's first official Bitcoin bank
- El Salvador's new Bitcoin banking law targets sophisticated investors
- El Salvador's Bitcoin-focused banking system faces challenges
- El Salvador and Pakistan establish a joint agreement to advance crypto collaboration
- Despite the ban, El Salvador continues announcing new Bitcoin purchases
- Amidst the financial constraints presented by the International Monetary Fund (IMF), El Salvador continues its pursuit of a Bitcoin-focused banking system, having authorized select investment banks to offer services like trading, custody, issuance, and digital asset management.
- servicing both Bitcoin and tokenized gold, these specialized banks are envisioned to provide a variety of services such as lending, savings, and payments, with a minimum capital requirement of $50 million and at least two shareholders.
- Despite the halting of Bitcoin purchases in response to IMF pressure, El Salvador has shown resilience by establishing partnerships, like the joint agreement with Pakistan to advance crypto collaboration and the memorandum of understanding with Bolivia for mutual cooperation in crypto policy development.
- As El Salvador continues to navigate the IMF's regulatory constraints, it faces challenges such as maintaining Bitcoin's volatility, establishing clear regulatory frameworks for Bitcoin banking, and ensuring public trust for sustainable success in the realm of cryptocurrency finance and technology.
