El Salvador accelerates its banking law to incorporate services with bitcoin

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Economic growth, that is the focus on which the president of El Salvador, Nayib Bukele, will focus for his second term. So one of the first actions he has decided to take is to present, before the National Assembly, a proposal to modify the banking law of the country in which bitcoin (BTC) is legal tender. Yesterday, the Technology, Tourism and Investment Commission of the Assembly received the bill sent by the Ministry of Economy that seeks to adapt Salvadoran financial regulation to orient it to international trends. With this reform, it is also intended “boost economic growth, strengthen the financial system and promote the country's competitiveness in the international arena,” according to the reading of the legislative president, Ernesto Castro. In itself, the proposal creates a chapter in the Banking Law to regulate the creation and operation of private investment banks, under the argument that these enhance the economic development of the country. This new banking sector may be established as public limited companies with variable capital and must have at least two shareholders, who have a minimum capital of 50 million dollars. The services that these banks will provide may be effective in Salvadoran legal tender, which makes it clear that for this They can use dollars or bitcoin, according to a media report from that country. It is noteworthy that clients of private investment banks must meet certain criteria to be classified as “sophisticated” clients. This means that they must have advanced financial knowledge and significant financial assets. The services that private investment banks will provide range from the purchase and sale of financial products and the management of economic risks. As other media highlight, the Salvadoran Executive seeks to private investment banks are authorized to use digital technology to facilitate their operations, among them. “Discussion begins on the reform of the Banking Law to create the new figure of “Private Investment Bank” and its entire legal framework.

Massive liquidity to our capital market, with collateral that can be valued and liquidated immediately, in a market that operates 24/7, and the highest possible standards.” William Soriano, Salvadoran deputy.

Representative William Soriano believes that the modification of the Banking Law prepares El Salvador to receive an unprecedented injection of capital. Source: X/William Soriano H.

Bitcoin as part of the national financial system

Since bitcoin was adopted as legal tender in El Salvador, The task of integrating service providers with bitcoin is pending to the national financial system, without intermediaries. The procedure was necessary, especially to comply with the Law on the Issuance of Digital Assets, which in its Article 19 – Ordinal A. It states that Digital Asset Service Providers will be able to exchange cryptoassets for fiat money or the equivalent for other digital assets, whether using one's own capital or the capital of a third party. And from then on, the process of modifying the rules that allow “access, participation, suspension, and exclusion from payment systems managed by the central bank to digital asset service providers” began.