TL; DR
Full story
This is confusing at first glance.
But dig a little deeper and it starts to make sense…
El Salvador wants to establish a Bitcoin Bank called “the Bank for Private Investments” (or BPI, if you’re mean).
That seems counterintuitive: 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.
That means if you want to tap into the wealth built in your crypto pockets, you’ll have to sell your BTC for cash, pay capital gains taxes, take what’s left to a bank, and then take out a loan.
And if you’ve ever met a Bitcoiner, you’ll know them hate say goodbye to their Bitcoin.
BPI’s solution 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 being hit with capital gains taxes.
And at the same time new wealth is being attracted to the country of El Salvador.
Pretty smart!
