The Central Bank of El Salvador Released the Rules for Conducting Transactions With Bitcoins
The central bank of El Salvador, Banco Central de Reserva (BCR), published on August 17 draft rules for banking institutions on how to conduct transactions related to Bitcoins.
In one of the documents, “Recommendations for Authorizing the Operation of a Digital Wallet Platform for Bitcoins and Dollars,” Bitcoin is recognized as a legal tender in El Salvador. And the second document, titled “Technical Standards to Facilitate the Application of Bitcoin Law,” provides detailed instructions on how banks can deal with clients, keep records and offer services related to BTC.
According to the regulations, Financial Institutions in order to offer digital wallets to customers must first contact the Central Bank. Institutions must provide detailed product descriptions, target market information, risk assessments, customer fees, customer training information, and complaints procedures in an attachment to the application.
In addition, each institution is required to use Know Your Customer (KYC) authentication with each customer and strictly follow full anti-money laundering procedures like monitoring and analyzing transaction data.
Service providers will be able to charge commissions. But the two-way convertibility of Bitcoins to the dollar must be ensured.
As explained by the author of “Attack of the 50-Foot Blockchain” David Gerard, the electronic platform used by the administrators of the digital wallet should allow the Central Bank to have real-time access to all information related to the transactions carried out, as well as information requested by customers.
All Bitcoins owned by banks and companies must be fully collateralized, not partial.
Also, any banks or financial institutions are required to warn customers that Bitcoin is unstable, transactions cannot be canceled and that if they lose their private keys, they will lose BTC.
However, so far the central bank of El Salvador has not issued provisions on accounting standards or government exchange rate standards for converting Bitcoins to fiat money and vice versa.