El Salvador Paves the Way for Bitcoin Investment Banks

Bitcoin is neither the cup of coffee of the IMF nor that of the bigwigs of international finance. While Washington and Brussels pull out the risk calculator, Nayib Bukele and his team pull out the crypto checkbook. Between boldness and stubbornness, El Salvador pursues its pro-bitcoin policy, even if it means walking a tightrope between financial innovation and institutional pressure.

In brief

• El Salvador authorizes its investment banks to hold bitcoin for qualified investors only.
• A PSAD license opens the possibility to operate exclusively in bitcoin and other digital assets.
• The country develops international alliances, notably with Bolivia and Pakistan, to support crypto adoption.
• National reserves reach 6,262 bitcoins, currently valued at over 730 million dollars.

A tailored legal framework for sophisticated investors

In August 2025, El Salvador, a bitcoin-accumulating country, adopted the Investment Banking Law, a law that clearly separates commercial banks and investment banks. From now on, the latter can hold bitcoin and other digital assets, but only for “sophisticated investors.” Juan Carlos Reyes, president of the National Digital Assets Commission (CNAD), summarized the spirit of this reform:

“The new law allows private investment banks to operate in legal and foreign currencies for ‘sophisticated investors,’ and to engage in digital assets like Bitcoin with a PSAD license.”

The PSAD license opens the door to 100% Bitcoin banking operations. The official goal is clear: attract foreign capital and make the country a crypto-friendly financial hub. However, some observers note that this orientation primarily favors large institutions rather than the general population.

Bitcoin and crypto at the center of new international alliances

This regulatory shift is not happening in isolation. El Salvador has recently increased international exchanges, particularly with countries sharing the same appetite for crypto-assets. In July, the Central Bank of Bolivia signed a memorandum of understanding with the CNAD to promote the use of cryptos amid a currency crisis. Pakistani Minister Bilal Bin Saqib, received by Bukele, explained:

“Cooperation is based on how emerging economies, both under IMF programs, can leverage technology and other financial instruments for national growth.”

These partnerships highlight a geopolitical battle: countries aiming to bypass dependence on dominant currencies and open up to monetary alternatives.

Regulatory challenges and key figures to watch

El Salvador’s bet is not without risks. The IMF has already conditioned its financial aid on legislative adjustments, including removing the requirement for merchants to accept bitcoin. The institution remains vigilant against volatility and money laundering risks. Max Keiser, Bitcoin advisor to Bukele, sees the trend as irreversible. He estimates Bitcoin is absorbing the 400 trillion dollars of stored value worldwide and reducing the influence of central banks. For now, financial indicators show a rising national crypto commitment:
• 6,262 BTC held by the State, worth over $730 million at current rates (Bitcoin price at $118,000).
• Law adopted in August 2025, introducing the PSAD license for bitcoin operators.
• Agreement signed with Bolivia amid dollar shortage.
• Private Investment Bank project with a minimum capital of $50 million.
Bitcoin adoption in El Salvador has never been straightforward. Between reforms, external pressures, and a desire to affirm financial sovereignty, the country plays a subtle regulatory hide-and-seek game with large institutions. Bukele and his team move forward by circumventing imposed rules, convinced that the crypto bet is the key to reshaping their monetary future.

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Frequently Asked Questions (FAQ)

Investment Banking Law

Q: When was the Investment Banking Law adopted in El Salvador? A: The Investment Banking Law was adopted in August 2025. Q: What is the main purpose of the Investment Banking Law? A: The law separates commercial banks from investment banks, allowing the latter to hold bitcoin and other digital assets for sophisticated investors.

PSAD License

Q: What does a PSAD license allow for in El Salvador? A: A PSAD license opens the possibility for operations exclusively in bitcoin and other digital assets, including 100% Bitcoin banking operations.

Sophisticated Investors

Q: Who are the eligible recipients for bitcoin holdings by investment banks under the new law? A: The law specifies that bitcoin and other digital assets can only be held for "sophisticated investors."

International Alliances

Q: Which countries has El Salvador formed crypto adoption alliances with? A: El Salvador has formed international alliances with countries like Bolivia and Pakistan to support crypto adoption.

Bitcoin Reserves

Q: How many bitcoins does El Salvador's national reserves hold? A: El Salvador's national reserves hold 6,262 bitcoins. Q: What is the approximate current value of El Salvador's Bitcoin reserves? A: The reserves are currently valued at over 730 million dollars, based on a hypothetical Bitcoin price of $118,000 per BTC.

Regulatory Challenges

Q: What are some of the challenges El Salvador faces regarding its pro-bitcoin policies? A: El Salvador faces challenges from institutions like the IMF, which has conditioned financial aid on legislative adjustments, such as removing the mandatory acceptance of bitcoin by merchants, and has concerns about volatility and money laundering risks.

Crypto Market AI's Take

El Salvador's bold move to integrate Bitcoin into its financial framework, particularly through the establishment of specialized investment banks, signals a significant shift in how nations are approaching digital assets. This strategy aims to attract foreign capital and position El Salvador as a crypto-friendly hub, a move that could inspire similar initiatives in other emerging economies seeking financial sovereignty. As El Salvador navigates these uncharted waters, understanding the evolving regulatory landscape and the technological underpinnings of these new financial instruments is crucial. For those interested in the broader implications of AI in finance and the dynamic world of cryptocurrency, exploring resources on AI-driven crypto market analysis and understanding the intricacies of cryptocurrency trading strategies can provide valuable context.

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• What Drives the Prices of Cryptocurrency?
• The AI Gig Economy is Here, and it Pays in Crypto
• AI-Driven Crypto Trading Tools Reshape Market Strategies in 2025

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Originally published at Cointribune on Sun, 10 Aug 2025