DISCLAIMER: The term "cryptolicense" in this text refers to the Bitcoin-related license (BSP license) and/or other cryptocurrency-related license (DASP license). The use of the term "cryptolicense" is intended solely to simplify the perception of the text by customers and visitors to the website.
El Salvador, the first country in the world to adopt bitcoin as an official means of payment, is rapidly emerging as an attractive cryptocurrency jurisdiction for businesses. With a favorable legislative environment and a progressive crypto policy, El Salvador is opening new horizons for innovation and financial opportunity.
El Salvador has two main laws that regulate cryptocurrencies:
- Bitcoin Law
- Digital Asset Issuance Law (DAI Law)
The Central Reserve Bank (Banco Central de Reserva; BCR) is the regulator that registers providers that engage in bitcoin-related activities - Bitcoin Service Providers (BSPs).
National Commission for Digital Assets (Comisión Nacional De Activos Digitales; CNAD is the government agency responsible for registering service providers that engage in activities related to other cryptocurrencies - Digital Asset Service Providers (DASPs).
El Salvador accepted Bitcoin as legal tender and became the first country that officially recognized the digital currency at the national level
Key Numbers about Cryptolicense in El Salvador
up to 4 monthterm of obtaining a cryptolicense |
0%capital gains tax (CGT) rate |
minimum of 2shareholders in the company |
0%corporate income tax (CIT) rate |
$2,000minimal share capital |
0%value added tax (VAT) rate |
Legal Opinion about Cryptolicense in El Salvador
Ganna Voievodina
Manimama, CEO
“A cryptolicense in El Salvador is worth obtaining for several reasons. First, it can provide legitimacy to cryptocurrency businesses, increasing credibility and facilitating regulatory compliance. In addition, obtaining a cryptolicense can open access to certain benefits or privileges, such as preferential treatment in regulatory processes or participation in government initiatives that support the development of the cryptocurrency sector.”
Types of Activities with Licenses in El Salvador
Exchange of digital assets for fiat money or its equivalent or for other digital assets, either using their own capital or that of a third party: DASPs can exchange digital assets for traditional currency (fiat money) or other digital assets, using either their own funds or funds provided by a third party, whether an individual or a company.
Risk and price assessment and underwriting of digital asset issues: DASPs can evaluate the potential risks associated with issuing digital assets, determine their fair market value and assume the responsibility to guarantee the sale of these assets at an agreed-upon price.
Promote, structure and manage all types of investment products in digital assets: DASPs can facilitate, organize, and oversee diverse investment opportunities within the realm of digital assets.
Purchase and sale of bitcoin (for BSPs): such service is provided by Digital Exchange Houses or Exchanges whose usual activity is the purchase and sale of bitcoin through an electronic platform or computer applications at prices determined by market supply and demand.
Operating a platform for the exchange or trading of digital assets, or derivative digital assets: DASPs can manage a digital platform where individuals or entities can buy, sell, or trade various types of digital assets or financial instruments derived from digital assets (futures contracts or options) in exchange for traditional currency or other digital assets.
Place digital assets on digital platforms or wallets: DASPs can transfer or deposit digital assets on online platforms or electronic wallets for safekeeping, trading, or other purposes, allowing users to access and manage their digital assets securely.
The following operations when performed on behalf of and in favor of third parties: DASPs can transfer digital assets or the means to access or control them, between natural or legal persons or between different acquirers, electronic wallets or digital asset accounts; safeguard, custody or manage digital assets or the means to access or control them; receive and transmit orders for the purchase or sale of digital assets or the trading of derivative digital assets; execute orders for the purchase or sale of derivative digital assets.
Custody services (for BSPs): such service is provided by Bitcoin Custodians that are persons engaged in the provision of custody services, on behalf of third parties, of bitcoin or the means of access to such bitcoin, in the form of private cryptographic keys.
Benefits of Obtaining a Cryptolicense in El Salvador
Choose the Package of Services
Popular package
Premium
Full set up of crypto company with office and accounting services
- Company formation in El Salvador
- Corporate documents
- Individual AML/KYC policies
- Full set of procedures requested by the law
- Business plan
- License application
- Search and recruitment of a Сompliance officer
- Office Rent Agreement for 1 year
- Accounting for 1 year (annual report included)
- Opening a bank account for crypto
Advanced
Registration of BSP and DASP under the full regulatory requirements
- Company formation in El Salvador
- Corporate documents
- Individual AML/KYC policies
- License application
- Business plan
- Search and recruitment of a Сompliance officer
Basic
Registration of BSP under the minimum regulatory requirements
- Company formation in El Salvador
- Corporate documents
- Standard AML/KYC policies
- License application
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Step by Step Description
Step 1. Initial setup
The following information and documents are required for a company incorporation:
- Preferred legal form (“S.A. de C.V.” which is the Salvadoran equivalent to Limited Liability Corporation)
- Preferred company name
- Power of Attorney - in the event that the shareholders are foreigners and they cannot attend the signing of the articles of incorporation in El Salvador, it is advisable that a special PoA duly legalized (certified by a notary public and authenticated before the respective Consulates or by means of Apostille) be issued
- Shareholders documents (if the shareholders were individuals (Salvadorans or foreigners), a copy of the identity documents of each one of them will be required but in the case of entities (national or foreign company), the corporate documents that prove the existence of the company and the appointment of the legal representatives will be needed, as well as the identity documents of their legal representatives)
- Salvadoran Tax Identification Number (NIT) of the shareholders
- Municipality Tax Clearance Certificate for Salvadorian shareholders
- Business model of your company
Step 2. Company registration
- Choosing a company name and checking in the Commercial Registry of El Salvador
- Determination the purpose/main business activity, domicile of the company
- Selection of shareholders and directors (at least 1 director is required who can be a Salvadorian; at least 2 shareholders are required who can be individuals (Salvadorans or foreigners) or entities (national or foreign company)
- Defining who will be the legal representative of the company
- Registration of the the Articles of Incorporation
- The application for company registration must be submitted to the Commercial Registry together with the articles of incorporation, attaching the initial balance sheet, which must be prepared by an accountant and certified by an auditor
Step 3. Opening a bank account
5% ($100) of the share capital which must not be less than $2,000 (~ €1,800) needs to be deposited into a bank account at the moment of incorporation, and the rest within one year
Step 4. Registration with public authorities
Once the company registration is approved, it is necessary to apply to the Ministry of Finance, the Salvadoran Social Security Institute and the Ministry of Labor to register the company with these authorities. You will have 15 days after the company registration to register with the Ministry of Finance to obtain the Taxpayer Registration Number and Tax Identification Number
Step 5. Preliminary actions and obtaining a license
Steps required to obtaining a BSP license in El Salvador:
- Documentation preparation (AML program, cybersecurity program, policy of transaction limits, etc.)
- Appointment of Certified Head of Compliance and a Deputy Head of Compliance, both positions must be occupied by people living permanently in El Salvador
- Registration as a Bitcoin Service Provider before the BCR
- A Certificate of Registration will be issued after the BCR confirms the completion of the registration process
Steps required to obtaining a DASP license in El Salvador:
- Documentation preparation
- Appointment of Certified Head of Compliance and a Deputy Head of Compliance, both positions must be occupied by people living permanently in El Salvador
- Applicant must fill out pre-registration form with information and documents related to applicant and area in which he wishes to operate
- CNAD`s assessment
- Submission of additional information by the applicant
- CNAD`s second evaluation
- Payment of a registration fee
Understanding Requirements in El Salvador
In El Salvador, it is possible to obtain a BSP License and/or a DASP License
The following сryptolicenses are available in El Salvador:
- A BSP License is required for companies that provide various Bitcoin-related services, such as exchanging Bitcoins for fiat money, making payments in Bitcoins, or storing Bitcoins on behalf of clients. Under the Bitcoin Act, the issuance of a BSP license is handled by the BCR.
- A DASP License is required for companies that provide a variety of services related to other cryptocurrencies. Under the DAI Law, registration of service providers is handled by the CNAD.
Requirements for Obtaining a Cryptolicense in El Salvador
The BSP and the DASP must have AML programmes
Requirements for a BSP:
- maintain an AML program that complies with the AML Law and international practices formulated by the FATF
- the head of compliance must be a resident of El Salvador
- maintain accounting records
- maintain a register of complaints
- maintain a cybersecurity program tailored to the nature of the services offered by the BSP
- maintain a physical security program and disaster recovery plan tailored to the nature of the services offered by the BSP
- maintain a resolution plan that provides for an orderly liquidation of the BSP in the event of insolvency
- maintain a policy of transaction limits within its platforms that is consistent with its user due diligence, comprehensive risk management and money laundering and other financial crime prevention programs
There is no cost to register as a BSP.
Requirements for a DASP:
- demonstrate the ability to offer the digital services
- implement appropriate cybersecurity standards on its platform for the operations to be carried out
- provide a detailed description of its organizational structure, including but not limited to names, positions, and specific functions
- demonstrate the possession of a coherent and efficient user support system that corresponds to the nature of the service to be provided
- maintain adequate financial and non-financial resources, as established by the CNAD
- have systems to prevent, detect and disclose the risks of financial crimes, such as money laundering and terrorist financing
- have a contingency plan for the orderly and solvent liquidation of their activity
DASPs shall:
- pay a one-time registration fee equivalent to fifteen minimum wages in the commerce and services sector
- pay an annual registration renewal fee equivalent to ten minimum wages in the commerce and services sector during the first quarter of the year
- pay $50 (~ €47), or its equivalent in bitcoin, for each additional registration certification issued to them, apart from the original certification
Taxes in El Salvador
El Salvador exempts cryptocurrency businesses from a number of taxes
Exchanges in bitcoin will not be subject to capital gains taxes like any legal tender.
Companies registered as DASPs in El Salvador exempted from:
- all types of fees, taxes, duties, and assessments on the face value and yield of digital assets
- taxes on capital gains and the ordinary income derived from the purchase, sale or transfer of digital assets
- goods and services transfer tax, income tax, and other tax obligations for service providers of digital assets the responsibility of withholding such taxes if such obligation exists
Frequently Asked Questions
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What are the steps to obtain a cryptolicense in El Salvador?To obtain a cryptolicense, you need to apply to the local regulatory authorities (BCR and/or CNAD), submit the necessary documents and undergo a compliance check.
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What are the requirements for exchanges to obtain a license in El Salvador?Exchanges must have clear anti-money laundering (AML) and Know Your Customer (KYC) procedures and maintain accounting records.
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What types of cryptolicenses are available in El Salvador?In El Salvador, available are: 1) BSP license (issued by BCR) - required for companies that provide various bitcoin-related services, such as exchanging bitcoins for fiat money, making bitcoin payments or storing bitcoins on behalf of clients; 2) DASP license (issued by CNAD) - required for companies that provide various services related to other cryptocurrencies.
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What are the authorized capital requirements for a company in El Salvador?5% of the authorized capital, which must be at least $2,000 (~1,800 €), must be deposited into a bank account at the time of company registration, and the remaining amount must be deposited within one year.
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What are the advantages for a business that has obtained a cryptolicense in El Salvador?The main benefits include access to global markets, tax benefits and trust from customers and investors.
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How long does the process of obtaining a cryptolicense in El Salvador take?On average, the process can take anywhere from a few weeks to a few months depending on the completeness of the documents submitted and the speed at which the application is processed.
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What cryptocurrency transactions are allowed in El Salvador after obtaining a license?Licensed companies can engage in cryptocurrency exchanges, provide cryptocurrency wallets, and trade on crypto exchanges.
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What are the requirements for directors and shareholders of cryptocurrency companies in El Salvador?A minimum of 1 director is required, who can be Salvadoran or foreign. A minimum of 2 shareholders are required, which can be individuals (Salvadoran or foreigner) or legal entities (national or foreign company).
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How does El Salvador's public policy support cryptocurrency businesses?The country actively supports cryptocurrency projects through tax incentives, the creation of a favorable regulatory climate, and investment in technology infrastructure.
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What are the advantages of El Salvador's jurisdiction for crypto businesses?The main advantages include innovative legislation, low taxes, strategic location and government support, which makes El Salvador attractive for cryptocurrency companies.
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