Bitcoin, crypto firms move to El Salvador, but success rides on banking access

Crypto businesses in El Salvador are hopeful that a Donald Trump presidency will soften banking resistance to the industry, making it easier to operate as the world’s largest economy moves toward greater crypto adoption. This would mark a stark shift from recent years when stricter policies left many firms struggling to maintain access to traditional banking services.

Most traditional US banks have mostly steered clear of digital asset firms in recent years, citing a lack of regulatory clarity. Companies in the crypto space have repeatedly denounced a deliberate effort from regulators in the country to choke them off the traditional financial system, a claim policymakers deny. 

Yet even in El Salvador—the world’s Bitcoin trailblazer, which passed its Bitcoin Law in 2021 and has been steadily adding BTC (BTC) to its national reserves—crypto firms claim they are still struggling to access traditional banking services, facing many of the same hurdles seen in other countries despite the government’s pro-crypto stance.

“The big problem with the crypto world is bank (access),” said Eloísa Cardenas, Chief Innovation Officer at Monetae, an El Salvador-based exchange, in an interview with Cointelegraph. 

“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. I’m telling you, even when you’re fully regulated and based in El Salvador, the local bank won’t give you access out of fear for its relationship with (US) correspondent banks. It’s ridiculous.”

While there have been exceptions, many US banks have remained cautious about serving crypto businesses, wary of regulatory scrutiny and the high costs of risk management. But crypto firms are optimistic that the tides are turning for the industry, as leaders in the US push for clearer regulations and stronger partnerships between traditional finance and the growing digital asset space.

“With Trump’s arrival, it’s expected that operations in the financial system will loosen up a bit,” Cadenas said. “It won’t be as restrictive as before.”

Greater banking acceptance needed in El Salvador

For El Salvador’s crypto ecosystem to thrive, greater acceptance from traditional financial institutions is crucial, Cadenas said. In 2021, President Nayib Bukele made global headlines by placing a bold bet on Bitcoin, enacting legislation that granted the cryptocurrency legal tender status in the country of six million. Shortly after, the government began purchasing Bitcoin on a recurring basis through Treasury investments.

While widespread adoption among Salvadorans never truly materialized—and the government recently agreed to drop mandatory Bitcoin acceptance as part of negotiations with the International Monetary Fund—Bukele’s unprecedented experiment triggered pushback from the international banking community, straining ties with the IMF.

Yet now, even the IMF has acknowledged that many of the feared risks have not materialized. And while Bukele’s grand Bitcoin vision has been scaled back in some ways, his government’s Treasury purchases have continued steadily—now accounting for roughly 15% of El Salvador’s total national reserves, or nearly $600 million.

Are US banks warming up to crypto?

While El Salvador is widely regarded as one of the most crypto-friendly nations in the world, crypto firms say access to traditional banking has remained a major roadblock for the ecosystem. However, with Trump’s potential return to the White House as a pro-crypto president—and his appointment of a crypto and AI czar—optimism is growing that momentum is shifting in the industry’s favor after years of regulatory headwinds.

“For the last several years, US bank regulators have unilaterally and undemocratically barred banks from offering crypto services,” Coinbase Chief Policy Officer Faryar Shirzad said on Feb. 4 social media platform X. 

“Coinbase is taking an important step toward ending the debanking of crypto by calling on (US regulators) to make clear that banks can engage in crypto activity and support the crypto community.”

There are indeed already some signs of traditional lenders warming up to the sector. At the World Economic Forum in Davos, Morgan Stanley CEO Ted Pick stated that the bank is committed to working with US regulators, including the Treasury Department, to explore ways to offer crypto services safely.

Bank of America CEO Brian Moynihan echoed this sentiment on Jan. 21, arguing that “If the rules come in and make it a real thing that you can actually do business with, you’ll find that the banking system will come in hard.”

Over the past weeks, US policymakers have increasingly focused on the challenges faced by crypto asset businesses in securing bank accounts, according to a recent report by Elliptic Global Policy and Research Group, a firm specializing in blockchain analytics.

In the report, the group said,

“The language of the Trump

executive order on digital assets is clearly targeted at steering a change in direction, offering the prospect of an environment where crypto asset firms can have more ready access to financial services from banks.”

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.