"Crypto Firms Eye El Salvador Despite Banking Hurdles"

Bitcoin and crypto firms are increasingly looking to El Salvador as a potential hub for their operations, drawn by the country's pro-crypto stance and legal tender status for Bitcoin. However, the success of these firms in El Salvador hinges on their ability to access traditional banking services, a challenge they continue to face despite the government's supportive policies.

Eloísa Cardenas, Chief Innovation Officer at Monetae, an El Salvador-based exchange, highlighted the banking access issue in an interview with Cointelegraph. She noted that even in El Salvador, which has been at the forefront of Bitcoin adoption, crypto firms struggle to open bank accounts due to fears of damaging relationships with US correspondent banks. This is despite the country's pro-crypto laws and regulations.

The lack of banking access is not unique to El Salvador. Many traditional US banks have been cautious about serving crypto businesses due to regulatory uncertainty and the high costs of risk management. However, crypto firms are optimistic that the tide is turning, with US leaders pushing for clearer regulations and stronger partnerships between traditional finance and the growing digital asset space.

For El Salvador's crypto ecosystem to thrive, greater acceptance from traditional financial institutions is crucial. In 2021, President Nayib Bukele made headlines by granting Bitcoin legal tender status and purchasing the cryptocurrency through Treasury investments. While widespread adoption among Salvadorans did not materialize, the government's Bitcoin purchases have continued steadily, now accounting for roughly 15% of El Salvador's total national reserves.

Despite initial pushback from the international banking community, the IMF has acknowledged that many of the feared risks have not materialized. This recognition, along with signs of US banks warming up to the crypto sector, has raised optimism among crypto firms that momentum is shifting in their favor.

Coinbase Chief Policy Officer Faryar Shirzadi recently called on US regulators to make clear that banks can engage in crypto activity and support the crypto community. Morgan Stanley and Bank of America CEOs have also expressed a willingness to explore crypto services, given the right regulatory framework. These developments suggest that the banking landscape for crypto firms may be improving, potentially benefiting those operating in El Salvador and other crypto-friendly nations.