Bitcoin News Today: El Salvador Legalizes Bitcoin Banking for Institutional Investors

El Salvador’s Parliament has approved a new Investment Banks Law that enables investment banks to hold Bitcoin on their balance sheets and offer cryptocurrency services to professional investors. The legislation, drafted by the Ministry of Economy, establishes clear regulatory boundaries between investment banks and traditional commercial banks, defining operational criteria for the former. To qualify as an investment bank, institutions must maintain a minimum registered capital of $50 million and at least $250,000 in free funds [1].

The law also sets specific requirements for the target investor base, limiting services to “sophisticated investors” who must demonstrate financial expertise, risk assessment capability, and a minimum net worth of $250,000 in free assets. This framework is intended to mitigate risks associated with high-volatility assets while encouraging institutional participation in the Bitcoin market [2].

Under the new regulatory environment, investment banks will be authorized by the Central Bank of El Salvador to operate and deliver Bitcoin-related services. The Ministry of Economy has confirmed that several investors are already considering engaging with this new financial framework, although specific names remain confidential [3].

The passage of this law marks a significant advancement in El Salvador’s broader Bitcoin integration strategy, which began in 2021 with the adoption of Bitcoin as legal tender. This latest development expands the utility of Bitcoin beyond retail transactions to include institutional investment vehicles such as bond issuances, public-private partnerships, and corporate investment management [4].

The law is expected to attract more institutional capital into the Bitcoin market, potentially influencing short-term price dynamics. Analysts speculate that increased institutional demand could lead to greater market stability and liquidity, although the long-term impact will depend on the responsiveness of the financial sector and investor behavior [5].

Notably, the International Monetary Fund (IMF) has indicated that El Salvador has suspended public Bitcoin purchases under its current loan agreement, signaling that the new law is a domestically driven initiative rather than one tied to external financial support [6].

By opening the door for investment banks to hold and manage Bitcoin, El Salvador continues to reinforce its status as a global leader in cryptocurrency adoption. The law reflects the government’s ongoing effort to balance innovation with regulatory oversight, while also positioning the country as a hub for digital finance [7].

This legislative shift underscores the evolving relationship between traditional financial systems and digital assets, setting a precedent for how other nations might approach Bitcoin as both a medium of exchange and an investment vehicle [8].

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Source:

[1] El Salvador passes law to allow investment banks to offer Bitcoin and digital asset services to sophisticated investors with at least $250,000 (https://cryptobriefing.com/bitcoin-investment-services-elsalvador-law/)

[2] El Salvador Regulator: Bitcoin Investment Banks are Coming (https://cointelegraph.com/news/bitcoin-investment-banks-coming-el-salvador)

[3] El Salvador Paves the Way for Bitcoin Investment Banks (https://www.cointribune.com/en/el-salvador-paves-the-way-for-bitcoin-investment-banks/)

[4] El Salvador’s Crypto Banking Revolution: How the 2025 Investment Banking Law is Reshaping Institutional Bitcoin Adoption (https://www.ainvest.com/news/el-salvador-crypto-banking-revolution-2025-investment-banking-law-reshaping-institutional-bitcoin-adoption-2508/)

[5] New Investment Bank Law in El Salvador Opens Doors to Bitcoin Products (https://news.bitcoin.com/new-investment-bank-law-in-el-salvador-opens-doors-to-bitcoin-products/)

[6] El Salvador courts crypto's deepest pockets with new banking law (https://finance.yahoo.com/news/el-salvador-courts-crypto-deepest-123411799.html)

[7] Bitcoin Price Prediction: El Salvador's New Law Fuels Institutional Demand (https://cryptonews.com/news/bitcoin-price-prediction-el-salvadors-new-law-fuels-institutional-demand-whats-the-btc-outlook/)