El Salvador Eyes Bitcoin-Friendly Banks: A Potential Hub for Crypto Investment?
El Salvador’s president, Nayib Bukele, a vocal advocate for Bitcoin, has proposed a bold move – the establishment of private investment banks specifically designed to cater to Bitcoin investors. These “Banks for Private Investment” (BPIs) aim to offer a more relaxed regulatory environment compared to traditional banks, potentially making El Salvador a hub for crypto investment.
The proposal, outlined by Salvadoran Ambassador to the United States Milena Mayorga in a June 14th social media post, comes shortly after Bukele secured a second five-year term in office. The BPI concept envisions a financial institution free from some of the restrictions placed on traditional banks. For example, BPIs wouldn’t face limitations on working with foreign banks or financing companies connected to their shareholders. Additionally, loan restrictions commonly imposed on traditional banks would be lifted.
El Mundo, a Salvadoran newspaper, elaborated on the proposal, stating that BPIs wouldn’t be subject to a regulation that prohibits banks from “extending credit or assuming risks for more than 25% of their Asset Fund in relation to the same person.” This relaxed approach could unlock significant investment opportunities.
However, to operate, a BPI would require a minimum share capital of $50 million and at least two shareholders, who can be foreign investors. Notably, these banks would be authorized to operate using both US dollars and Bitcoin, with the potential to seek approval to provide digital asset and Bitcoin-related services.
The proposal for BPIs originated from El Salvador’s Minister of Economy, María Luisa Hayem, under the direction of President Bukele. While the proposal has not yet been formally approved, it has garnered support from Bukele’s senior Bitcoin advisor, Max Keiser. Keiser highlighted the potential economic benefits, citing Ark Invest CEO Cathie Wood’s prediction that El Salvador’s GDP could increase tenfold within the next five years.
The introduction of BPIs could be a game-changer for El Salvador’s financial landscape. By offering a more crypto-friendly environment, the country could attract significant investment in the digital asset space. However, it remains to be seen if El Salvador’s legislative body will approve the proposal, potentially ushering in a new era for Bitcoin investment.
