El Salvador's government is actively promoting Bitcoin regulations as a means to enhance financial inclusion for its unbanked population, which constitutes nearly 70% of the country.

In line with President Nayib Bukele's initiative, the government plans to introduce Bitcoin-only banks to further integrate Bitcoin into the national financial system.

Details regarding the Bitcoin-only banks are forthcoming, with the government emphasizing their potential to expand access to financial services.

Currently, the proposal for these banks is under review by the Technology, Tourism, and Investment Commission.

To establish a Bitcoin-only bank, a minimum share capital of $50 million and at least two shareholders are required, allowing them to register as digital asset managers or Bitcoin service providers.

Ambassador Milena Mayorga noted that the proposed model would grant banks greater flexibility, including fewer restrictions on international partnerships and lending limits.

This initiative builds on Bukele's earlier proposal for a Bank for Private Investment (BPI), which would enable banks to operate with both Bitcoin and USD under less stringent regulations.

The newly enacted 2025 Investment Banking Law further institutionalizes Bitcoin's role, mandating banks to obtain a PSAD license and comply with AML/KYC regulations to attract foreign investment.

El Salvador's Bitcoin reserves, previously valued at approximately $767 million, support initiatives like the Chivo wallet and geothermal Bitcoin mining projects.

Max Keiser, a senior Bitcoin advisor to Bukele, believes that this initiative could significantly enhance El Salvador's GDP, with support from Ark Investment CEO Cathie Wood, who predicts economic growth from the adoption of BPIs.

The structured approach by the El Salvadoran government aims to leverage Bitcoin's potential while addressing economic risks, positioning the country as a leader in the global cryptocurrency landscape.

Despite domestic optimism, analysts and the International Monetary Fund (IMF) express concerns over Bitcoin's volatility and the need for consumer protection, cautioning El Salvador against further Bitcoin purchases as part of a $1.4 billion credit agreement.