News

The Legislative Assembly of El Salvador has approved a set of reforms to the Digital Assets Law that incorporates conduct rules for Bitcoin service providers. 

This amedment aims to strengthen the digital asset ecosystem in the country and provide a clearer structure for regulating Bitcoin Service Providers (PSB) and Digital Asset Service Providers (PSAD). 

One of the main changes is the expansion of the powers of the National Digital Assets Commission (CNAD). This entity will become the sole body responsible for regulating and supervising the entire digital asset industry, including tokens and stablecoins, excluding the Central Reserve Bank (BCR) and the Superintendence of the Financial System (SSF). The CNAD will have the authority to require PSADs and PSBs to increase their capital, thereby promoting financial stability within the sector. 

Additionally, the reform establishes that PSBs and PSADs must be exclusively registered legal entities with the Commercial Registry, either as foreign branches or corporations, excluding other types of companies such as simplified stock companies (SAS). 

Regarding territoriality, the registration of PSADs will allow them to offer services solely within the jurisdiction of El Salvador, leaving each jurisdiction responsible for its own regulations if they wish to operate in other territories. 

New Compliance Measures and Programs 

The reform also places a strong emphasis on implementing anti-money laundering and asset security programs. PSBs will be required to develop robust policies to protect both their clients’ assets and personal information, including: 

• Maintaining records of assets, liabilities, and equity. 

• Keeping a complaints register, a cybersecurity program, a physical security program, and a disaster recovery plan tailored to the provider’s nature. 

• Registering client accounts and complying with KYC (Know Your Customer) regulations. 

• Implementing a limit on digital asset transactions of USD 1,000.00. 

• Establishing security policies to protect clients’ digital assets. 

Stablecoin Issuance 

A new definition for stablecoins is introduced: “a type of digital asset designed to maintain a stable value, which references, represents, or is backed by one or more fiat currencies or another underlying asset that maintains low volatility.” Previously, stablecoins were recognized as assets that minimized price volatility and referenced, represented, or were backed by an asset or basket of assets, not necessarily characterized by low volatility. 

Additionally, the definition of a public offering of a stablecoin is incorporated, defined as “a technical or commercial proposal communicated to the general public, in a mass manner, in any form and by any means, that presents sufficient information about the terms of the offering, with the goal of marketing or selling stablecoins.” The issuance of a stablecoin can only be conducted through a public offering. 

Rodrigo Benítez 
rodrigo.benitez@garciabodan.com
Associate
García & Bodán
El Salvador