Breach: El Salvador Has Released The First Draft Of Rules For Banks Under The Bitcoin Act

El Salvador made history on June 9 this year after a bill was passed to make bitcoin legal tender. The small Central American country has now issued the first draft regulations for banks under the bitcoin Act, which will take effect from September 7. Salvador’s central bank, Banco de Reserva (BCR), has released its first draft of policy for banks participating in bitcoin.

Central Bank releases two documents

Guide to authorizing and operating digital wallet platforms for Bitcoin and dollar
Technical standards to facilitate implementation of Bitcoin law

The draft proposal requires banks to obtain permission from the central bank to provide bitcoin-related services. Banks are also required to specify the risks that the customer may face and intend to overcome them.  Payment service providers should offer bitcoin’s convertibility to dollars while providing KYC, and vice versa. Read the technical standard document,

“The purpose of these rules, various digital transactions and payments with electronic mechanisms to function properly only with bitcoin or dollars and suppliers, which allow you to regulate the commercial relations between the rights and obligations between financial institutions.”

The proposed rules apply to::

Digital wallets in Bitcoin and dollars
Digital exchange offices or Bitcoin and dollar exchange
Payment service providers for Bitcoin and dollars
Any other agent in the value chain of a product or service associated with these standards, such as technology repositories and suppliers associated with bitcoin.

El Salvador plans to enforce bitcoin law despite increased control
The Latin American country has been under more pressure from global financial regulators and rating companies. The IMF was the first to raise concerns about Salavador’s acceptance of a highly volatile asset as legal tender and how this could damage financial stability. Moody’s and Fitch also downgrade El Salvador’s credit rating

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