Key takeout
New laws in El Salvador allow investment banks to provide Bitcoin and digital asset services to sophisticated investors of at least $250,000. Investment banks can be digital asset service providers and issuers operated separately from commercial banks.
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The Legislative Assembly in El Salvador has approved the Sweep Investment Banking Act, which creates a new class of financial institutions that will only serve high-end and institutional clients, according to a recent press release.
El Salvador’s parliament introduced the measure last year to establish a private investment bank that can handle Bitcoin transactions, diversifying investors’ funding sources and allowing BTC and USD deposits, lending and a wide range of financial services.
The measure, supported by the Ministry of Economy, sets out a regulatory framework for investment banks that provide services such as asset management, financial advisory, structured corporate transactions, structured financing, and market analysis.
Investment banks must maintain a minimum share capital of $50 million and operate separately from commercial banks. These agencies can request permission to become a digital asset service provider, digital asset issuer, and Bitcoin service provider.
The lawmaker said the move aims to attract international private capital, financial groups and wealthy individuals to use El Salvador as a hub for regional operations.
The new law sponsored by the Ministry of Economy will limit clients to sophisticated investors. It is defined as a sophisticated investor, extensive market experience, the ability to carry complex financial risks, and a liquid asset of at least $250,000.
This framework allows investment banks to carry out a variety of businesses, including bond issuance, loan grants, foreign currency transactions, and complementary services.
The new bank will be regulated by the Central Reserve Bank (BCR) and will set standards for capital, liquidity, risk management and digital asset management. Oversight of the Financial System (SSF) oversight oversees compliance, transparency and investor protection.
Dania González, a member of El Salvador’s legislative assembly, said investment banks are key to helping governments, businesses and institutions raise capital for key projects.
The law is expected to bring great benefits, from attracting foreign capitals, international financial groups and wealthy individuals to positioning El Salvador as a regional financial hub.
“We are turning El Salvador into a specialized financial hub, creating international reputation, institutional trust and competitiveness,” Gonzalez noted.
Legislative development comes after Bitcoin Bank signaled earlier this week that it was coming to El Salvador.
This is a developing story. Please come back for more updates.
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