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The government of El Salvador has presented a reform proposal to create a private investment bank. In particular, the proposed reform aims to allow the bank to carry out operations in Bitcoin and US dollars, El Salvador's ambassador to the United States, Milena Mayorga, said in a recent post.
As part of our economic plan for El Salvador, we propose a BPI, Private Investment Bank, where we can diversify the financing options we offer to potential investors in Dollars and #Bitcoin. 🚀#BitcoinBank#Economic freedom https://t.co/3hfwVvTSeX
— Milena Mayorga (@MilenaMayorga) June 14, 2024
In other words, under the new bill, the bank can accept deposits, make loans, and potentially offer other financial services using Bitcoin alongside the US dollar.
In addition, the reform aims to allow private banks to request authorization for digital asset services and Bitcoin services, according to local media. report.
The reform aims to create a legal framework for private investment banking in El Salvador, facilitating the flow of financial resources to companies and government projects. As noted, the bank would require a minimum capital of $50 million and could have foreign shareholders.
“(Private banks) will only obtain funds from so-called “sophisticated investors”, to whom they will also be able to grant loans if they present a guarantee,” the report states. “Sophisticated investors are defined in the reform bill as those who have investment experience, evaluate risks and have freely available assets equivalent to $250,000 or $500,000.”
Additionally, compared to traditional banks, private investment banks would have fewer restrictions, such as lifting the ban on foreign-related contracts with affiliated entities or removing limitations on loan concentrations and credit exposure to a single borrower, according to The report.
The reform proposal has been 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 starting May 15.
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 Bitcoin adoption and use in the future.
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