In a bold move that’s turning heads across the global financial landscape, El Salvador has approved a groundbreaking Investment Banking Law that creates a framework for Bitcoin-focused investment banks. The law distinguishes these new entities from commercial banks, letting them hold Bitcoin and other digital assets on their balance sheets. Pretty revolutionary stuff.
El Salvador’s groundbreaking law empowers Bitcoin banks to revolutionize finance by holding digital assets alongside traditional currencies.
The Central Reserve Bank and Superintendency of the Financial System will oversee these institutions, ensuring they meet technical requirements. Any bank wanting to play in the crypto sandbox needs a Digital Asset Service Provider license. Or they can go full Bitcoin-only if they’re feeling adventurous. These banks can also offer fiat-backed stablecoins to provide stability in volatile crypto markets.
The bar for entry isn’t low. A cool $50 million in paid-in capital is required, and these banks can only serve “sophisticated investors” with at least $250,000 in assets. Not exactly for the average Joe.
These institutions can offer asset management, M&A advisory, and handle complex financing in both digital and traditional markets. They can manage deposits, issue financial instruments, and conduct transactions in Bitcoin, stablecoins, and tokenized commodities. Versatile players in a new financial game.
El Salvador has come a long way since making Bitcoin legal tender in 2021. That policy got tweaked in early 2025 to satisfy IMF conditions for a $1.4 billion loan. The mandatory Bitcoin acceptance for businesses? Suspended. Apparently, even crypto revolutionaries need conventional financing sometimes.
The strategy seems clear: attract international private capital and position the country as a digital asset finance hub. The country’s Legislative Assembly passed the law with a strong majority of 55 votes in favor. This shift comes after El Salvador slowed down public sector crypto initiatives to balance innovation with economic stability. By separating investment banks from commercial lenders, El Salvador aims to address prudential concerns while still pushing its crypto agenda.
Will it work? Who knows. But El Salvador is certainly going all-in on institutional crypto adoption. It’s a gamble that could pay off big time or flop spectacularly. Either way, traditional finance is getting a run for its money. Literally.
