Bitcoin News Today: El Salvador Passes Law Allowing Banks to Hold and Trade Bitcoin

El Salvador has advanced its cryptocurrency integration with the passage of a new Investment Banking Law, which permits major financial institutions to offer services related to Bitcoin and other digital assets. The law, approved by the National Assembly on August 7, 2025, introduces a new category of investment banks distinct from commercial lenders, granting them the authority to hold and trade Bitcoin and digital assets on their balance sheets [1]. These institutions must maintain a minimum capital of $50 million and may apply for additional licenses to serve as Bitcoin service providers, digital asset service providers, or digital asset issuers [2].

Under the new law, investment banks can now provide crypto-related financial products and services, including trading, custody, and issuance of digital assets. However, these services are restricted to qualified investors—individuals with a minimum net worth of $250,000 and relevant financial experience [3]. The regulatory framework aims to mitigate risks associated with speculative trading and promote a more stable and institutional-grade investment environment [4].

The move is seen as a continuation of El Salvador’s broader digital currency strategy, which began with the adoption of Bitcoin as legal tender in 2021. However, recent reports indicate a shift in policy as the government lifts the mandate for businesses to accept Bitcoin payments, reportedly to secure a $1.4 billion loan from the International Monetary Fund [5]. This decision has slowed down public sector Bitcoin initiatives, including the government's daily purchase of 1 BTC, which was revealed to be a transfer from existing government wallets rather than new acquisitions [6].

The law also emphasizes a clear distinction between investment banks and traditional commercial banks. While investment banks gain flexibility to operate in the crypto space, commercial lenders remain bound by conventional banking regulations [7]. This separation is expected to attract both domestic and international financial institutions looking to capitalize on the growing digital asset market [8].

The timing of the law’s passage is notable, as it follows the rumored introduction of Bitcoin education into the national curriculum for students aged seven and older. While no official confirmation has been issued, the mere suggestion has sparked speculation about its potential influence on Bitcoin’s price and market sentiment [9].

From an analytical standpoint, the new law reflects El Salvador’s strategic attempt to balance innovation with economic stability. By encouraging institutional participation in the crypto market, the country is laying the groundwork for a more mature and regulated financial ecosystem. However, the absence of direct government involvement in Bitcoin purchases under the current IMF agreement indicates a cautious approach to public financial commitments in the crypto space [10].

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[1] El Salvador, the Bitcoin-supporting country, has passed a new law for corporate investments! Here are the details. https://en.bitcoinsistemi.com/el-salvador-the-bitcoin-supporting-country-has-passed-a-new-law-for-corporate-investments-here-are-the-details/

[2] Inside El Salvador's Bitcoin banking law: loans, deposits and what banks can now do. https://crypto.news/inside-el-salvadors-bitcoin-banking-law-loans-deposits-and-what-banks-can-now-do/

[3] El Salvador courts crypto's deepest pockets with new banking ... https://www.dlnews.com/articles/regulation/el-salvador-courts-cryptos-deepest-pockets-new-banking-law/

[4] El Salvador will reportedly dial back its bitcoin ambitions to ... https://www.aol.com/el-salvador-reportedly-dial-back-184623327.html

[5] El Salvador allows private banks to hold bitcoin. https://www.facebook.com/groups/965332910900317/posts/1988935938540004/

[6] El Salvador Reportedly Becomes First Nation to Teach Bitcoin (BTC) to Students 7+: Key Signals for Traders | Flash News Detail | Blockchain.News https://blockchain.news/flashnews/el-salvador-reportedly-becomes-first-nation-to-teach-bitcoin-btc-to-students-7-key-signals-for-traders

[7] El Salvador passes law letting investment banks hold ... https://www.rootdata.com/news/150316

[8] Best Crypto to Buy as El Salvador Welcomes Bitcoin ... https://www.mitrade.com/insights/news/live-news/article-3-1026905-20250810

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

[10] Bitcoin Nears $120000 Again As El Salvador Opens ... https://www.newsbtc.com/news/bitcoin/bitcoin-nears-120000-again-as-el-salvador-opens-bitcoin-banks/