The Bank for Private Investment will “diversify the financing options” available to investors in both Dollars and Bitcoin.

El Salvador's President Nayib Bukele is advocating for the creation of private investment banks, which would offer Bitcoin investors access to financial services with fewer restrictions than traditional banks. This initiative, part of Bukele's economic strategy for El Salvador, was highlighted by the Salvadoran Ambassador to the United States, Milena Mayorga, in a June 14 post on X (formerly Twitter). She emphasized that these banks would diversify financing options in both Dollars and Bitcoin.

Max Keiser, a senior Bitcoin advisor to Bukele, also commented on the proposal, noting that Cathie Wood, CEO of Ark Invest, predicts El Salvador’s real GDP could increase tenfold over the next five years. Keiser believes this growth prediction has become more plausible with the proposed legislation.

Details of the Proposed Bank for Private Investment (BPI)

The BPI is designed to operate under more flexible regulations compared to traditional banks. Key features of the proposal include:

1. Fewer Restrictions: BPIs will not be bound by prohibitions that apply to traditional banks, such as restrictions on engaging with overseas banks or finance companies linked to their shareholders or business groups.
2. Loan Flexibility: They will not face limits on the amount of credit they can grant or risks they can assume, which are typically capped at 25% of their Asset Fund for traditional banks.
3. Capital Requirements: To establish a BPI, a minimum share capital of $50 million is required, and at least two shareholders are necessary, who can be foreign investors.
4. Legal Tender: BPIs can operate in any legal tender, including the United States Dollar and Bitcoin, and can seek approval to become digital asset and Bitcoin service providers.

The proposal was brought forth by El Salvador’s Minister of Economy, María Luisa Hayem, under Bukele's direction to the Technology, Tourism, and Investment Commission. However, it has not yet been approved, as the legislators have not scheduled consultations with officials regarding the project’s objectives or put it to a vote.

Context and Implications

This proposal comes shortly after Bukele was sworn in for a second five-year term following a landslide victory in February. It aligns with his broader strategy to position El Salvador as a leading nation in Bitcoin adoption and economic innovation.

The creation of BPIs could potentially attract more foreign investment and bolster the country's economic growth by providing more accessible and versatile financing options. If approved, this legislation could further solidify El Salvador's status as a pioneer in integrating Bitcoin into its financial system, potentially leading to significant economic transformation and increased financial inclusion.