In a bold move to bolster its burgeoning crypto-friendly economy, El Salvador's pro-Bitcoin president, Nayib Bukele, has introduced a proposal to establish private investment banks that would cater specifically to Bitcoin (BTC) and Dollar investors. This initiative aims to provide enhanced financial services with fewer restrictions compared to traditional banking institutions.

The proposal, announced by Salvadoran Ambassador to the United States Milena Mayorga on June 14, outlines the creation of the Bank for Private Investment (BPI). "As part of our economic plan for El Salvador, we propose a BPI, Bank for Private Investment, where we can diversify the financing options offered to potential investors in Dollars and Bitcoin," Mayorga stated on X.

President Bukele's new legislative push comes shortly after his re-election for a new five-year term, following a decisive victory in February. Max Keiser, a senior Bitcoin advisor to Bukele, emphasized the significance of this move, highlighting Ark Invest CEO Cathie Wood’s optimistic forecast that El Salvador's real GDP could increase tenfold over the next five years. Keiser noted that this projection is becoming increasingly plausible with the introduction of the Bitcoin Bank.

BPI: A New Paradigm for Investment Banking

The BPI proposal suggests a significant departure from the constraints of traditional banking laws. According to a report from El Mundo, the BPI will not be subjected to the stringent regulations that govern conventional banks. These include restrictions on engaging with overseas banks or finance companies linked to their shareholders and limits on the amount of credit or risk they can assume in relation to their Asset Fund.

Investment banks under this new framework would also be exempt from prohibitions that prevent traditional banks from granting credit or assuming risks exceeding 25% of their Asset Fund for a single entity. This regulatory flexibility is designed to attract more substantial investment and foster economic growth.

To establish a BPI, a minimum share capital of $50 million and at least two shareholders, who may be foreign, will be required. This stipulation aims to ensure robust financial backing and diverse ownership.

Expanding Financial Services and Digital Asset Integration

Once approved, BPIs will be authorized to operate using any legal tender, including the US Dollar and Bitcoin. They could also seek approval to become digital asset and Bitcoin service providers, further integrating cryptocurrency into El Salvador's financial ecosystem.

El Salvador’s Minister of Economy, María Luisa Hayem, has proposed the reform to the Technology, Tourism, and Investment Commission under President Bukele's guidance. However, the proposal has yet to receive legislative approval. "The reform has not been approved; The legislators have not yet agreed to call officials to consult the objectives of the project nor have they put it to a vote in the Commission," the report noted.

If enacted, this initiative could significantly enhance El Salvador’s appeal as a hub for crypto investment and innovation, aligning with President Bukele's broader vision of economic modernization and financial inclusivity through cryptocurrency adoption.