El Salvador announces the introduction of Bitcoin banks! The world's first Bitcoin country pushes for financial innovation, while the IMF raises ongoing doubts.

The pioneer of Bitcoin fiatization, El Salvador, has made another astonishing move — President Nayib Bukele announced via social media plans to introduce "Bitcoin Banks" into its economic system. This move aims to deepen its Bitcoin-driven economic strategy, but the specific regulatory framework and operational model have not yet been disclosed. If implemented, it will reshape the financial service landscape for nearly 70% of the unbanked population in the country. The plan stems from Bukele's proposal last year for a "Private Investment Bank" (BPI), aimed at providing a more flexible and less regulated banking environment, allowing registration as a digital asset management institution. Although supported by figures like Max Keizer and Cathie Wood, the IMF continues to warn about the volatility risks of crypto assets.

Bitcoin Bank Arrives at the "Bitcoin Nation"

The Salvadoran government announced today (August 8) on the social media platform X: "Bitcoin bank is coming to the Bitcoin country." This suggests that the country may launch a bank specifically serving Bitcoin operations. This move is the latest extension of President Bukele's Bitcoin economic strategy, aimed at further integrating Bitcoin into the core of the national financial system. If implemented, it will fundamentally change the way Salvadoran citizens access financial services.

Model Conjecture: Originating from the BPI proposal, focusing on flexible regulation

As of now, El Salvador, which made Bitcoin a legal tender in September 2021, has not announced the specific regulatory details for the "Bitcoin Bank." Outside speculation suggests that these institutions may offer deposits, loans, and financial investment tools priced in Bitcoin (BTC). The plan is in line with President Bukele's proposal last year for a "Bank for Private Investment" (BPI). El Salvador's ambassador to the U.S., Milena Mayorga, explained that the BPI model aims to allow banks to operate in El Salvador with regulatory requirements that are far lower than traditional banks, face fewer restrictions when establishing partnerships with international banks, and have greater flexibility in loan amounts. Booker's original plan requires that the BPI organization must have a minimum capital of 50 million US dollars and at least two shareholders. The key point is that the BPI can sign up as a digital asset management institution and Bitcoin service provider. The proposal is currently still under review by the country's Technology, Tourism and Investment Committee.

Support and Outlook: Boosting GDP and Economic Growth Expectations

• **Government Advisor Supports: ** Senior Bitcoin advisor to Booker, Max Keizer, believes that introducing Bitcoin into the banking sector will significantly boost the country's GDP.
• Wall Street Optimistic: Cathie Wood, CEO of Ark Invest, has predicted that as the BPI plan progresses, El Salvador will experience higher economic growth in the next five years.

Challenges and Controversies: IMF Warnings and the Financial Inclusion Dilemma

Despite analyses suggesting that Bitcoin banks could enhance financial inclusion for the nearly 70% of the unbanked population in this "Bitcoin nation" and provide alternatives to the traditional banking system, challenges and controversies coexist:

• Fluctuation Concerns: Analysts and observers generally view Bitcoin's severe volatility and the market doubts it raises as the primary concerns regarding its integration into the banking sector.
• IMF Continues to Warn: The International Monetary Fund (IMF) has consistently opposed the widespread adoption of Crypto Assets, particularly emphasizing that price Fluctuation and lack of consumer protection are core issues, and has a critical stance on El Salvador's Bitcoin strategy.

Bitcoin National Road: Continuously Deepening Strategy

Since El Salvador designated Bitcoin as legal tender in September 2021, it has continued to advance its Bitcoin strategy:

1. Launch the state-supported Chivo wallet.
2. Invest in Bitcoin reserves and Bitcoin bonds (commonly known as "Volcano Bonds").
3. Launch a Bitcoin mining project driven by geothermal energy. The Bitcoin banking plan announced today is unclear whether it will follow the BPI model or adopt a completely new framework. The Salvadoran government is expected to announce more details later, but its determination to double down on the adoption of Bitcoin has been made evident.

IMF Report Reveals Subtle Relationship

A report from the IMF shows that El Salvador has complied with its commitment to "not increase Bitcoin holdings" in the $1.4 billion credit agreement. The IMF pointed out that the recent Bitcoin activity in the country's wallets is due to asset consolidation among different internal wallets, rather than new purchasing behavior. This report contradicts the El Salvador government's previous insinuation that these transfers were new acquisitions, revealing subtle differences in communication strategies between the two parties. Last month, when Bitcoin reached a historic high of $123,000, the market value of El Salvador's Bitcoin holdings once soared to $767 million.

Conclusion: El Salvador's plan to introduce a Bitcoin bank is yet another radical experiment to solidify its position as a "global Bitcoin laboratory." The BPI model envisions a potential template for global Crypto Assets banks, particularly in terms of financial inclusion and regulatory flexibility. However, the inherent volatility of Bitcoin, the ongoing warnings from the IMF, and the challenges posed by a large unbanked population domestically are realities that must be faced. The success or failure of this plan is not only related to El Salvador's own economic transformation but will also provide important references for global sovereign nations exploring crypto financial paths outside of Central Bank Digital Currencies (CBDC). The market will closely monitor the issuance of subsequent regulatory details and the actual operational effects.