TL;DR

• El Salvador’s proposed ‘Bitcoin Bank’ will allow customers to take out traditional cash loans against their BTC holdings (so customers can keep their BTC, while leveraging their wealth).

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This is confusing at first glance.

But dig a little deeper and it starts to make sense…

El Salvador wants to create a Bitcoin Bank, called “the Bank for Private Investment” (or BPI, if you’re nasty).

Which seems counter-intuitive — the whole point of crypto is to move away from centralized banking solutions.

But the problem that Bitcoin (and every other cryptocurrency out there) has is that it exists outside of the current system.

Which means if you want to leverage the wealth built up in your crypto bags, you have to sell your BTC for cash, pay capital gains tax, take whats left to a bank, then take out a loan.

And if you’ve ever met a Bitcoiner, you’ll know they hate parting with their Bitcoin.

The solution posed by BPI is this:

Bank with them and you can take out traditionally recognized cash loans against your Bitcoin holdings.

Allowing wealthy customers to buy other traditional assets (think: homes and businesses), without parting with their Bitcoin, and without getting hit with capital gains tax.

And all while attracting new wealth to the country of El Salvador in the process.

Pretty smart!