Operating within the cryptocurrency industry requires businesses to secure specific licenses. These permits are necessary for companies involved in digital asset transactions, including cryptocurrency wallet services, token issuance, and trading platform management. Brokers and firms offering investment solutions related to cryptocurrencies must also obtain a license to comply with regulatory standards.
Why Choose El Salvador for a Crypto License?
El Salvador has positioned itself as a leading jurisdiction for cryptocurrency enterprises. In 2021, it became the first country that adopted Bitcoin as legal tender along with the US dollar. There are two key laws that regulate the process of procuring a cryptocurrency license and conducting digital asset activities:
- The Bitcoin Law of 2021 – This is the law that made Bitcoin legal in the country.
- The Law on the Issuance of Digital Assets (LEAD) – This legal document regulates cryptocurrency transactions, issuance, and usage.
Advantages of a Crypto License in El Salvador
El Salvador’s progressive stance on cryptocurrency offers several advantages for businesses:
- Tax Benefits: Companies registered under El Salvador’s crypto regulations enjoy exemptions from cryptocurrency transaction taxes, including capital gains tax.
- Simplified Registration: The country provides a streamlined process for registering cryptocurrency firms.
- Government Support: Authorities actively encourage blockchain innovation and digital finance advancements.
Let’s look at these benefits under the microscope.
Tax Incentives
The Salvadoran government has introduced appealing tax policies that became a major draw for non-resident cryptocurrency enterprises. One of the advantages you should definitely pay attention to is capital gains tax exemption for registered companies that comply with regulations set by the National Commission on Digital Assets (CNAD).
Asset Protection and Legal Stability
The country’s cryptocurrency legislation establishes a robust legal framework for handling digital assets. Licensed firms operate in a legally stable environment, which ensures ownership rights and asset security. As a result, the risks related to regulatory uncertainties and market volatility, common in other jurisdictions, are effectively mitigated.
Enhanced Credibility Among Investors
A crypto license in El Salvador signals a company’s commitment to compliance, security, and transparency. It fosters trust among investors and financial institutions. This credibility is essential when attracting strategic partners and complying with Anti-Money Laundering (AML) and Know Your Customer (KYC) standards aligned with international guidelines.
Available Crypto Licensing Packages in El Salvador
Companies seeking a license can opt for tailored packages that cover business registration, licensing, tax compliance, and banking solutions.
- Gold Package ($18,765 + fees): Comprehensive company registration, legal structuring, tax setup, licensing, accounting, and compliance.
- Silver Package ($16,815 + fees): Essential registration services, including document preparation, tax identification, licensing, and corporate bank account setup.
- Blue Package ($10,880 + fees): Basic business registration, tax ID acquisition, and licensing.
Types of Crypto Licenses in El Salvador
Businesses can apply for one of two crypto licenses:
- Bitcoin Service Provider (BSP) License – Required for companies offering Bitcoin-related services (exchange, storage, payment processing). Issued by the Central Reserve Bank (BCR).
- Digital Asset Service Provider (DASP) License – Mandatory for firms dealing with cryptocurrencies other than Bitcoin, covering tokens, altcoins, and other digital assets. Issued by CNAD under LEAD regulations.
Steps to Obtain a Crypto License in El Salvador
To secure a license, businesses must follow the steps described below:
Step 1: Preliminary Registration with CNAD
Applicants must demonstrate their intent to comply with national regulations. This stage, lasting 2-4 weeks, involves submitting essential documents such as a business plan, corporate structure details, and AML/KYC compliance strategies. Failure to meet requirements may entail rejection.
Step 2: Company Formation and Licensing Application
You will need to register your company as a legal entity before you submit an application and obtain a license. Here is a package of documents you will have to collect and file:
- Founding documents
- Information on shareholders and directors
- Compliance policies (AML, cybersecurity, and risk management)
The review by CNAD will take 3-6 months. It checks whether you adhere to all regulatory and financial standards.
Step 3: Opening a Corporate Bank Account
A business account will help you manage financial transactions and make any payments, including regulatory ones. Companies must submit legal and compliance documents for approval. This process takes 4-8 weeks, and it runs parallel to licensing procedures.
Once all regulatory checks are completed, CNAD grants the company a permit, allowing operations in El Salvador’s digital asset sector. The entire process typically takes six months to complete.
Crypto License Requirements in El Salvador
To qualify for a crypto license, companies must fulfill specific criteria:
- Company Establishment: Registration in El Salvador
- Minimum Capital: At least $2,000
- Physical Presence: A local office is required
- Compliance Officers: Appointment of AML and regulatory compliance specialists
Documentation Requirements
Businesses must provide:
- Corporate founding documents
- Identity verification for directors and shareholders
- A three-year business plan
- AML and cybersecurity policies
- Organizational structure details
Registering a Crypto Company in El Salvador
Setting up a crypto business involves several key steps:
1. Selecting the Appropriate Legal Structure
Most cryptocurrency firms opt for an LLC (Limited Liability Company) due to its flexibility and compliance with crypto regulations.
2. Preparing Documentation
Applicants must compile:
- Incorporation documents
- Shareholder and director details
- AML/KYC policies
3. Submitting the Registration Application
The complete application package is submitted to El Salvador’s National Registry, accompanied by regulatory compliance documents.
4. Establishing a Corporate Bank Account
Companies must provide banking details to CNAD for final approval. You will need the right financial institution to ensure smooth transaction processing.
5. Regulatory Registration
Entities must register under the appropriate regulatory bodies:
- BSP-licensed firms: Must register with the Register of Bitcoin Service Providers (RPSBTC)
- DASP-licensed firms: Register with the Register of Cryptocurrency Providers (RPSAD)
In addition, companies must obtain a tax identification number (NIT) from El Salvador’s tax authority, even though cryptocurrency transactions are tax-exempt.
Ongoing Compliance and License Renewal
Crypto licenses in El Salvador must be renewed annually. Companies must:
- Submit financial reports
- Provide updated compliance documentation
- Pay an annual renewal fee
Regulatory Updates and Compliance Enhancements
El Salvador continues to refine its cryptocurrency regulations in a bid to improve transparency and efficiency. The amendments to the LEAD Law made in 2023 made compliance requirements even stricter:
- Enhanced AML/KYC protocols
- Tokenization of real assets/stablecoins
- Digital tools for streamlined licensing and oversight
Conclusion: The Future of Crypto in El Salvador
El Salvador is setting new global standards for cryptocurrency regulation. The destination offers unique advantages for crypto businesses after it has recognized Bitcoin as legal tender and prioritized digital economy development.
Start your licensing process today! Our expert consultants will provide comprehensive legal support to ensure your compliance with El Salvador’s regulations. Follow the closest link above to get in touch.
