Crypto Firms Flock to El Salvador, But Banking Hurdles Remain a Challenge
El Salvador, the first country to adopt Bitcoin as legal tender, has become a magnet for crypto firms looking to operate in a regulatory-friendly environment. However, despite the government’s pro-crypto stance, companies in the industry still face significant challenges in accessing traditional banking services. With the possibility of Donald Trump’s return to the White House, this businesses are hopeful that US banking restrictions will ease, allowing for smoother financial operations.
Crypto Adoption in El Salvador: A Bold Move
In 2021, El Salvador made headlines by becoming the first nation to grant Bitcoin legal tender status. Under President Nayib Bukele, the government initiated large-scale Bitcoin purchases, with BTC holdings now accounting for approximately 15% of the country’s total reserves, valued at nearly $600 million.
Key Highlights of El Salvador’s Bitcoin Initiative
| Year | Key Event | Impact |
| 2021 | Bitcoin Law Passed | BTC became legal tender alongside the US dollar |
| 2022 | Government BTC Purchases | Treasury investments in BTC initiated |
| 2023 | IMF Review | Some risks predicted by IMF did not materialize |
| 2024 | Bitcoin Reserves Grow | BTC accounts for ~15% of national reserves |
Despite these bold moves, widespread Bitcoin adoption among Salvadorans has been slow, and businesses continue to struggle with limited banking access.
Banking Resistance Poses Challenges
While El Salvador has created a crypto-friendly regulatory framework, local banks remain hesitant to work with these firms. Many fear repercussions from their US banking partners, who have historically avoided digital asset businesses due to unclear regulations and heightened compliance risks.
Eloísa Cardenas, Chief Innovation Officer at Monetae, explains:
“In El Salvador, there is a law, right? You say, ‘Oh, it’s super pro-crypto,’ but the banks won’t open an account for you. Even when you’re fully regulated, the local bank won’t give you access out of fear for its relationship with US correspondent banks. It’s ridiculous.”
This issue extends beyond El Salvador. In the US, many traditional banks have steered clear of these businesses due to regulatory uncertainty, leading industry leaders to accuse financial regulators of deliberately cutting off access to traditional banking services.
US Banks and the Changing Crypto Landscape
For years, US policymakers have maintained a cautious approach toward these firms, with strict regulations limiting their access to the financial system. However, recent developments indicate a potential shift in the industry’s favor.
Growing Optimism in the Crypto Sector
- Donald Trump’s Crypto Stance: A potential return of Trump to the White House has raised hopes that US banks will ease restrictions on crypto businesses.
- Push for Regulatory Clarity: Industry leaders, including Coinbase Chief Policy Officer Faryar Shirzad, are advocating for clearer guidelines that allow banks to support these businesses.
- Wall Street’s Growing Interest: Financial giants like Morgan Stanley and Bank of America have expressed interest in offering crypto services if regulations are clarified.
Statements from Banking Leaders:
- Ted Pick, CEO of Morgan Stanley: “We are committed to working with regulators to explore safe ways to offer crypto services.”
- Brian Moynihan, CEO of Bank of America: “If the rules make it a real thing that you can do business with, you’ll find that the banking system will come in hard.”
With increasing pressure from policymakers and financial institutions warming up to the idea of crypto, there is growing optimism that the regulatory climate will shift in favor of digital assets.
The Future of Crypto in El Salvador
For El Salvador’s crypto ecosystem to thrive, access to traditional banking is essential. Without financial infrastructure support, these businesses may struggle to scale operations and integrate into the global financial system.
Key Factors Influencing Crypto Success in El Salvador
| Factor | Current Status | Potential Solutions |
| Banking Access | Limited | Regulatory clarity, US bank support |
| Government Support | Strong | Continued investment in BTC and blockchain projects |
| Public Adoption | Slow | Increased education and incentives |
| Global Crypto Regulations | Uncertain | Favorable US policies could boost industry confidence |
What’s Next for Crypto Firms?
- Stronger Industry Advocacy: Companies like Coinbase continue to push for financial inclusivity.
- Global Banking Reforms: Potential regulatory changes in the US could positively impact banking relationships.
- Innovation in Financial Services: New blockchain-based solutions could reduce dependence on traditional banks.
While El Salvador remains a beacon for the innovation, banking challenges continue to hinder its full potential. These firms are optimistic that US regulatory changes, particularly under a pro-crypto administration, will ease restrictions and allow the industry to flourish. For now, the success of Bitcoin adoption in El Salvador—and globally—depends largely on bridging the gap between digital assets and traditional banking institutions.
