El Salvador has approved new legislation that will open the door for large financial institutions to offer Bitcoin and other digital asset services to institutional investors. The law, passed by the country’s legislative assembly, allows financial institutions with at least $50 million in capital to qualify as investment banks.
These institutions can now apply for licenses to provide services denominated in Bitcoin and other cryptocurrencies to investors holding more than $250,000 in liquid assets.
The new framework builds on El Salvador’s existing crypto regulations, which already permit firms to register as bitcoin service providers, digital asset service providers, or digital asset issuers. The latest legislation allows qualifying investment banks to add these crypto-related licenses to their existing bank licenses.Â
In practice, it enables well-capitalized institutions to hold Bitcoin, issue tokens, and structure crypto-linked financial instruments without creating an entirely new regulatory regime.
According to lawmaker Dania González, the reform will expand the institutional structure of El Salvador’s financial system by introducing a new but regulated entity that will operate alongside the traditional banking sector. The legislation was supported by the Ministry of Economy, signaling the government’s intention to attract larger pools of capital into its digital asset ecosystem.
In 2021, El Salvador broke new ground by making Bitcoin legal tender and requiring shops to accept it. The plan was to get people using it every day. The government pulled back on several Bitcoin projects, a step it took while negotiating a $1.4 billion loan with the International Monetary Fund (IMF).
Despite the global attention its Bitcoin experiment received, adoption among Salvadorans has remained low. Studies show that only about 1% of remittances involve cryptocurrencies, and just two out of every ten citizens report using them.
The Bitcoin Office, overseen by President Nayib Bukele, continues to claim that it is purchasing one Bitcoin per day. However, the central bank president and finance minister told the IMF in July that no new purchases have been made since the loan agreement was signed.
The IMF’s report suggested that recent additions to the government’s central reserve wallet likely reflect the transfer of Bitcoin from other state wallets that had already acquired the holdings.
By targeting sophisticated investors and enabling regulated institutions to handle crypto assets, the government appears to be shifting its Bitcoin strategy away from grassroots adoption toward attracting institutional capital.
