Crypto license in Salvador

1. Incorporate an El Salvador Company: Form a local corporation (Sociedad Anónima, often). Prepare corporate documents (bylaws, board consent) and register with the Mercantile Registry. (A Salvadoran lawyer or agent can handle this.)
   
2. Prepare Documentation: Develop all required compliance documents, including a detailed business plan, AML/CFT policies, KYC procedures, cybersecurity plan, internal controls, and a code of ethics. Spanish-language translations may be needed. Prepare the “Relevant Information Document” describing your services and team.
   
3. Appoint Officers: Name at least two directors (foreigners allowed) and appoint a local resident legal representative and compliance officer. Ensure all controllers and beneficiaries have clean backgrounds.
   
4. Submit Application to CNAD: File the application form (available on CNAD’s website) with supporting documents. Pay the registration fee (≈USD 5,475 for DASP). CNAD reviews for completeness and may request clarifications.
   
5. CNAD Review (5–6 months): The regulator checks compliance with LEAD requirements and may consult authorities. If approved, CNAD issues a registration certificate and the company is listed as a DASP in the public registry.
   
6. Post-Licensing Steps: After approval, open a local corporate bank account and deposit required capital. Register as an employer for taxes and social security, registration with the Ministry of Labor, Salvadoran Social Security Institution, and AFP.
   

Throughout the process, local advisors often interact with CNAD on the company’s behalf. The process is considered relatively fast and low-cost by global standards.

Maintenance and Ongoing Requirements

Holding a crypto license entails continuous obligations:

• Annual Fee: Mandatory annual DASP payment: USD 3,650 (pricing slide also lists EUR 3,476 per annum).
  
• Reporting: Submit quarterly financial reports to CNAD (end of Jan/Apr/Jul/Oct) and any requested transaction summaries. File annual audited financial statements with CNAD (and to tax authorities). Maintain proper accounting records, payroll reports, and tax returns.
  
• Audits: Companies meeting asset or revenue thresholds must have their financials audited by a registered Salvadoran auditor. Even if not required, it’s common to preempt auditor scrutiny.
  
• Compliance Updates: Keep AML/CFT, cybersecurity, and other policies current. Any change in key personnel or business activities must be reported to CNAD. Licensees should have procedures for ongoing KYC and transaction monitoring.
  
• Supervision: CNAD may conduct inspections or request information at any time. Entities must cooperate with CNAD and possibly other authorities (e.g. Superintendency of Financial System).
  
• Taxes and Legal: Despite crypto-specific breaks, the company must still file any applicable Salvadoran taxes (e.g. VAT on non-crypto services, withholding on payments) and comply with labor laws if they employ staff.
  

Failure to meet maintenance requirements can trigger warnings, fines, or suspension of the license. Thus, licensed firms usually engage local accountants and lawyers to ensure compliance.

Renewal, Suspension and Revocation

The crypto license does not expire automatically, but the company must renew it annually by paying fees and demonstrating compliance. CNAD is empowered to suspend or cancel a DASP’s registration for violations of the law or regulations. For example, operating without a valid license, engaging in unapproved crypto offerings, breaching AML rules, or providing false information can all lead to sanctions. The reform law added explicit penalties for unlicensed digital asset operations.

If a license is suspended, the company must halt crypto services until resolved. A revoked registration would require reapplication. In practice, CNAD seeks corrective measures (expanded policies, fines) before revocation. Strict record-keeping and prompt reporting help minimize this risk.

2023–2025 Regulatory Updates

• 2023 – Crypto Law Enacted: In January 2023 El Salvador passed Digital Asset Service Provider Regulation to regulate digital assets and create CNAD. This was a landmark as one of the first comprehensive crypto laws in Latin America.
  
• 2024 – Expanded CNAD Powers: In October 2024 the legislature approved reforms to LEAD. These reforms explicitly gave CNAD authority over Bitcoin services and expanded regulation of token offerings. A new chapter now governs Bitcoin Service Providers (custodians, exchanges, wallets). Private (non-public) crypto offerings were brought under supervision, and CNAD gained discretion to set future fees. Importantly, registration was clarified as valid only within El Salvador (firms cannot claim cross-border rights).
  
• 2025 – Bitcoin Law Changes: Pressure from the IMF led to major shifts in early 2025. In January 2025, Congress amended the Bitcoin Law to make acceptance of Bitcoin voluntary for merchants (it was previously mandatory). Shortly thereafter (February 2025), the Bitcoin Law was fully repealed – Bitcoin ceased to be a legal tender. These changes do not directly alter the DASP regime, but they reflect the evolving stance on crypto policy. The Law of Issuance of Digital Assets remains in force for all other tokens.
  

These updates illustrate that El Salvador’s crypto framework is active and maturing. CNAD, established after the Bitcoin Law, continues to work on issuing guidance and collaborating internationally (e.g. a 2025 MoU with Bolivia’s regulator). Registered DASP licensees should monitor CNAD notices for any new rules on AML/CFT or tech standards.

Why It’s Attractive for Crypto Businesses

For fintech startups and crypto firms, El Salvador offers compelling strategic value:

• Regulatory Clarity & First-Mover Advantage: As one of the first jurisdictions with a full crypto law, El Salvador provides clear licensing rules. Startups can leverage the jurisdiction’s novelty to attract media attention and tech partnerships.
  
• Zero Tax Regime: The near-zero tax on licensed crypto activity is a major financial incentive. This lowers operating costs and increases net returns for investors.
  
• Dollar Economy: Operating in a USD economy simplifies global transactions and avoids local currency volatility. It also makes El Salvador a relatively safe haven for foreign investment.
  
• Innovative Ecosystem: Government projects like the Digital Assets Exchange (BVES) and partnerships with blockchain firms (e.g. Tether) signal strong support for crypto innovation. A CNAD-run public registry of issuers and providers adds transparency and trust in the market.
  
• Low Barriers for Entry: Minimal capital requirement and allowance of non-resident management make it easy to establish a presence. The virtual office option and lack of local staffing requirements keep overhead low.
  
• Regional Access: A license here can be a springboard into Latin America. Central America’s remittance and tourism sectors (worth ~$7B/year) are increasingly seeing crypto solutions. El Salvador’s leadership in the region may open doors for pilots and collaborations.
  

However, firms should weigh these benefits against the aforementioned challenges (e.g. small local market, evolving rules).

Official Sources & Primary Legislation (El Salvador)

Primary Acts

• Ley de Emisión de Activos Digitales (DL 643) – full text (Spanish, CNAD legal library)
• Digital Assets Issuance Law – non-official English translation (CNAD)
• Reglamento de Proveedores de Servicios de Activos Digitales (2023) – DASP regulation (Spanish, downloads page)
• Reglamento de Emisión de Ofertas Públicas de Monedas Estables (2023) – Stablecoins public offering regulation (Spanish)
• Reglamento de Registro de Emisores y Emisiones Públicas y Privadas – Issuers & Issuances Registry regulation (Spanish)
• Ley Bitcoin (Decreto Legislativo n.º 57, 2021) – archival full text (Spanish, Diario Oficial)
• Decreto Legislativo n.º 199 (29 Jan 2025) – Bitcoin Law reform (removes mandatory legal-tender acceptance; Spanish)

National Commission of Digital Assets (CNAD)

• Official CNAD website – regulator and licensing portal
• Legal Framework library – consolidated links to the law & regulations
• Register as a Digital Assets Service Provider (PSAD/DASP) – application process & requirements
• Digital Assets Service Providers – Public Registry – official list of registered DASPs
• Issuers – Public Registry – entities authorized as issuers
• Issuances – Public Registry – authorized public/private offerings
• Certifiers – Public Registry – accredited certifying entities
• Downloads – forms & procedural guidance (e.g., PSAD registration procedure)
• Transparency Portal – Normative Framework – official list of laws, regulations & guides