El Salvador plans to advance the integration of Bitcoin into its banking system

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The government of El Salvador presented a reform proposal to create a private investment bank. Notably, the proposed reform aims to allow the bank to conduct operations in Bitcoin and US dollars, El Salvador’s Ambassador to the US Milena Mayorga said in a recent post.

In other words, under the new proposed law, the bank can accept deposits, make loans and potentially offer other financial services using Bitcoin alongside the US dollar.

Furthermore, the reform aims to allow private banks to seek authorization for digital asset services and Bitcoin services, according to a local media report. report.

The reform aims to create a legal framework for El Salvador’s private investment bank, facilitating the flow of financial resources to companies and government projects. As noted, the bank would require a minimum capital of US$50 million and could have foreign shareholders.

“[The private bank] will only raise funds from so-called “sophisticated investors”, to whom they will also be able to grant loans if they provide a guarantee”, states the report. “Sophisticated investors are defined in the reform bill as those who have investment experience, assess risks and have freely available assets equivalent to US$250,000 or US$500,000.”

Additionally, compared to traditional banks, private investment banks would have fewer restrictions, such as lifting the ban on foreign contracts with affiliated entities or removing limitations on loan concentrations and credit exposure to a single borrower, according to the report.

The reform proposal was received by the Legislative Assembly but has not yet been approved.

El Salvador has been at the forefront of Bitcoin adoption in recent years. In September 2021, the country became the first to adopt Bitcoin as legal tender.

Additionally, the country is mining Bitcoin using volcanic geothermal energy, with almost 474 Bitcoin mined from May 15th.

Under the leadership of President Nayib Bukele, a strong supporter of Bitcoin, El Salvador is expected to advance your pro-Bitcoin agendaexploring ways to increase the adoption and use of Bitcoin in the future.

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