El Salvador Releases Draft Bitcoin Banking Regulation

On August 19, according to foreign media reports, the Central Reserve Bank of El Salvador (BCR) has issued draft regulations on how banks should handle Bitcoin, detailing how banks should handle Bitcoin and guiding banks and financial institutions on how to provide Bitcoin-related services to their customers.
Yesterday, two documents were issued for public comment. The first document, titled "Guidelines for the Authorization of Bitcoin and US Dollar Digital Wallet Platform Operations" (Spanish), defines Bitcoin as legal tender according to the Bitcoin Law passed by the El Salvadorian legislature on June 9, and will officially adopt the digital asset on September 7.
The second document, titled "Technical Standards to Facilitate the Legal Application of Bitcoin," is a longer and more detailed version of the first. The guidelines state that financial entities must apply to the central bank to offer digital wallets. The application must detail the type of product offered, including details of the target market, risk assessment, fees, education for customers and complaint procedures. All customers will need to undergo Know Your Customer (KYC) verification.
In addition, banks must provide two-way exchange of Bitcoin for US dollars and can charge a fee. All Bitcoin held by banks and companies must be fully backed, rather than backed by fractional reserves. US dollars will be held at the central bank, while BTC will be held by custodians, whose services can be outsourced.
However, the document does not specify any accounting rules or standard government exchange rates for converting Bitcoin into fiat currencies or vice versa.