Bitcoin News Today: El Salvador Approves World's First Bitcoin-Only Banks

El Salvador has taken a landmark step in the global cryptocurrency movement by authorizing the operation of banks that function entirely in Bitcoin. This development is the latest in a series of moves by the country to embed digital assets into its financial system, following its 2021 adoption of Bitcoin as legal tender. Under the new policy, accredited investors—individuals or entities that meet certain financial criteria—can now open accounts, transact, and manage funds in institutions that operate exclusively using Bitcoin, without the need to convert to fiat currencies [1].

The initiative is governed by a new Investment Banking Law that distinguishes Bitcoin-based banks from traditional commercial banks, allowing them to hold and transact in BTC while offering services such as deposits, loans, and transfers within the same framework [2]. The law sets a minimum share capital of $50 million and requires at least two shareholders, aiming to ensure financial stability and attract high-net-worth investors and international crypto firms [3].

This regulatory shift aligns with President Nayib Bukele’s broader vision to position El Salvador as a global leader in cryptocurrency adoption. The country, which has one of the largest unbanked populations in Latin America, sees this development as an opportunity to drive financial inclusion and attract foreign investment through digital asset services [4]. By creating a legal and regulatory environment tailored to Bitcoin, the government hopes to foster innovation and build a sustainable crypto-based financial infrastructure.

The approval of Bitcoin-only banks represents a significant departure from traditional banking systems. These institutions will operate under the same regulatory oversight as conventional banks but will have greater flexibility in forming international partnerships and structuring loan agreements. They will also benefit from streamlined processes for cross-border transactions, which are often costly and time-consuming in traditional banking [5].

However, the move has drawn attention from global financial institutions and analysts. The International Monetary Fund has previously expressed concerns about the volatility and risks associated with cryptocurrencies [6]. Analysts have echoed these concerns, highlighting that while Bitcoin banking could offer an alternative to traditional systems, it also exposes users to price fluctuations that can affect asset values and loan repayment terms. Despite these concerns, the government remains optimistic, with senior advisors such as Max Keiser suggesting that the integration of Bitcoin into the banking sector could contribute to economic growth and GDP expansion [7].

El Salvador’s commitment to Bitcoin is evident in its ongoing efforts, including the launch of the Chivo wallet and the development of geothermal-powered mining projects. The country has also built a Bitcoin reserve that reached $767 million at its peak, and the government has signaled its intent to continue expanding its digital asset portfolio. However, the exact implementation of the Bitcoin banking model is still under review, and details on regulation, licensing, and operational frameworks remain to be finalized [8].

Analysts like Cathie Wood have forecasted that El Salvador’s Bitcoin strategy could boost economic growth over the next five years. These are projections, and the actual outcomes will depend on how effectively the new banking model is implemented and how it is received by both domestic and international markets [9].

As the global financial community watches closely, El Salvador is demonstrating a bold and unconventional approach to integrating cryptocurrency into its economic framework. While the long-term success of this initiative remains uncertain, the country’s actions are setting a precedent for how other nations might approach digital assets in the future.

Sources:

[1] Binance (2025). El Salvador Advances Bitcoin Investment Banking with New Legislation. https://www.binance.com/en/square/post/08-09-2025-el-salvador-advances-bitcoin-investment-banking-with-new-legislation-28094472887577

[2] Coinpedia (2025). El Salvador Plans World's First Bitcoin Banks. https://coinpedia.org/news/el-salvador-plans-worlds-first-bitcoin-banks/

[3] AMBCrypto (2025). How El Salvador's New Law Could Make Bitcoin Banks a Reality. https://ambcrypto.com/how-el-salvadors-new-law-could-make-bitcoin-banks-a-reality/

[4] Coinnews.com (2025). Bitcoin Investment Banks Set to Launch in El Salvador. https://coinnews.com/news/cryptocurrency/bitcoin-investment-banks-set-to-launch-in-el-salvador-says-goverment-official

[6] CryptoPolitan (2025). El Salvador has announced in a post on X plans to introduce Bitcoin banks in the Bitcoin country. https://www.binance.com/square/post/28094474863673