El Salvador Allows Banks to Become Bitcoin-Only Institutions

El Salvador Allows Banks to Become Bitcoin-Only Institutions

El Salvador’s government, under President Nayib Bukele, has enacted a groundbreaking law allowing banks to operate as Bitcoin-only entities for accredited investors effective August 3, 2025.

This move aims to transform El Salvador into a Bitcoin finance hub, attracting global capital and potentially increasing institutional Bitcoin flows in the market.

El Salvador has introduced a new regulation allowing banks to operate solely as Bitcoin banks for accredited investors, becoming a pioneer in institutional digital asset banking. The law takes effect on August 3, 2025, marking a historic move.

Under the leadership of President Nayib Bukele and CNAD’s Juan Carlos Reyes, this initiative aims to transform El Salvador’s financial sector and establish the country as a hub for Bitcoin finance.

Immediate market reactions include heightened interest from global investors, with $120 million in institutional investments already secured. Industry experts predict increased liquidity and enhanced staking flows for Bitcoin at the institutional level, driving further financial market changes.

With a minimum capital requirement of $50 million per bank, the law signals both financial opportunity and regulatory transformation, positioning El Salvador as a leader in the Bitcoin banking sector globally. As Juan Carlos Reyes, Chairman of CNAD, stated, “The new Investment Banking Act allows private investment banks to provide services to ‘sophisticated investors’ in both fiat and foreign currencies and to hold a Digital Asset Service Provider (PSAD) license to engage in digital asset business such as Bitcoin. Banks holding PSAD licenses can choose to operate entirely as Bitcoin banks.”

While prospects for international capital interest are high, global analysts express some caution, highlighting economic and social impacts. The transformative nature of this law could alter financial landscapes globally, increasing institutional Bitcoin adoption.

The regulatory shift offers potential for broader digital asset banking if policies expand, similar to models in Liechtenstein and Switzerland . BTC’s central role in these systems may pave the way for future innovations in crypto banking.