El Salvador’s central bank has published two documents bearing draft regulations on how banks in the country should deal with Bitcoin.
The two PDFs released for consultation purposes on August 17 defines how cooperative banks with savings and credit societies should offer Bitcoin-related services to their customers.
The first document titled “Guidelines for the Authorization of Operation of the Digital Wallet Platform for Bitcoin and Dollars” (in Spanish) declares BTC as a legal tender under the country’s recently passed Bitcoin Law.
The second document, named “Technical Standards to Facilitate the Application of the Bitcoin Law” (also in Spanish), sheds more light on the first document.
Guidelines from the documents state that every financial institution must apply with the central bank before it can offer digital wallets services. Each application must show details of the product being offered, ranging from target market info to risk assessments, customer charges, education provisions for customers, and complaint procedures.
KYC (Know-your-customer) verifications will also be required for all customers, although it is unclear what form of identification will be recognized. Similarly, complete anti-money laundering (AML) procedures like transaction monitoring and analysis would also be applied.
David Gerard, the author of “Attack of the 50 Foot Blockchain” stated in a translated version of the draft that:
The electronic platform used by the digital wallet administrators must allow the Central Bank access in real-time to all information related to the operations carried out, as well as information requested by clients.
Meanwhile, financial institutions are required to warn customers of the volatile nature of Bitcoin, according to Article 29 of the second document.
Regulations were not set on accounting standards or standard government exchange rates for converting Bitcoin into fiat and vice versa.