El Salvador continues to rewrite the rules for crypto regulation. While Bitcoin is no longer mandatory legal tender, the country has built one of the world’s most sophisticated digital asset frameworks. Here’s what businesses and investors can expect from crypto licensing in El Salvador.
Major Changes Reshape El Salvador’s Crypto Landscape
El Salvador shifted to voluntary Bitcoin use in March 2025, marking the official beginning of its regulated crypto era. Bitcoin remains voluntary legal tender but businesses are no longer legally required to accept it. This change came after pressure from the International Monetary Fund for a $1.4 billion loan agreement.
The Digital Assets Issuance Law (LEAD) amendments in late 2024 created the National Commission of Digital Assets (CNAD) as the central regulatory body responsible for licensing, oversight, and enforcement of digital asset regulations. CNAD now serves as the single point of entry for all digital assets in the country.
El Salvador ranked first in the Americas for crypto regulation with a score of 9.2, according to Coincub’s 2024 Crypto Asset Regulation Report. Only Switzerland scored higher globally with 9.6.
New Investment Banking Laws Open Doors for Institutions
The National Assembly passed the Investment Banking Law in August 2025, allowing large financial institutions to provide services in Bitcoin and digital assets. Only institutions with over $50 million in capital can become investment banks and apply for crypto licenses.
These investment banks can only work with “sophisticated investors” holding more than $250,000 in liquid assets. This creates a new tier of regulated crypto services for wealthy individuals and institutions.
The law separates investment banks from commercial banks. Investment banks can operate entirely in Bitcoin, offering deposits, loans, and asset management without relying on traditional currencies.
Two Main License Types Available
To obtain a crypto license in El Salvador, entities must appoint a compliance officer and cybersecurity personnel to review AML/KYC compliance. CNAD grants two types of licenses:
- Bitcoin Service Provider (BSP) License: Required for Bitcoin-related services like exchanges, storage, and payment processing. The Central Reserve Bank (BCR) issues BSP licenses.
- Digital Asset Service Provider (DASP) License: Covers services involving other cryptocurrencies beyond Bitcoin. CNAD issues DASP licenses under the Digital Assets Issuance Law.
Over 20 licensed entities now work under CNAD oversight, showing growing institutional trust despite slower public adoption.
Stronger Compliance Requirements
After LEAD amendments in late 2024, El Salvador VASPs must implement proper AML policies, monitor transactions, and report suspicious activities to CNAD. The Financial Investigation Unit (UIF) investigates suspicious activities by following up on reports from service providers.
BSPs must develop AML programs following FATF standards and maintain accurate records of assets, liabilities, equity, and client data. BSPs must establish transaction limit policies, with a recommended limit of $1,000 for digital asset transactions.
The reforms stipulate that PSB and PSAD must be legal entities registered in the Commerce Registry, either as foreign branches or joint-stock companies, excluding simplified joint-stock companies.
Tax Benefits Remain Attractive for Businesses
El Salvador has no capital gains tax on Bitcoin transactions for individuals and offers significant tax exemptions for crypto companies. These benefits continue despite the regulatory changes.
Tax incentives exempt foreign investors from capital gains on Bitcoin, while LEAD streamlines crypto business registration. Companies can expect exemptions from import duties, and won’t pay income tax for income generated outside the country.
All issuers, providers, certifiers, and acquirers of digital assets enjoy exemptions from VAT, income tax, municipal taxes, and any other taxes regardless of nature.
International Partnerships
CNAD signed a memorandum with Bolivia’s Central Bank in July 2025, covering blockchain intelligence tools, regulatory frameworks, and risk analysis models. The cooperation aims to increase cryptocurrency adoption and financial modernization in both countries.
El Salvador also signed a crypto regulatory agreement with Paraguay in March 2025, facilitating cooperation for the crypto sector and strengthening anti-money laundering practices.
CNAD is seeking to establish a cross-border regulatory sandbox with the U.S. Securities and Exchange Commission, with the idea for the SEC to use El Salvador as a live case study for streamlined regulatory approaches.
What This Means for Your Business?
Getting licensed in El Salvador now requires more paperwork but offers greater legitimacy. The licensing process takes about 6 months on average and includes company registration, bank account opening, and regulatory approval.
Companies must register a legal entity in El Salvador with at least two shareholders and provide identification documents. A minimum of one director is required, who can be Salvadoran or foreign.
The regulatory framework provides legal certainty for crypto businesses. El Salvador’s clear regulatory framework offers legal certainty and a stable environment for crypto businesses to operate.
Public Adoption Remains Low Despite Progress
Public adoption remains low, with user penetration at 3.34% in early 2025. The number of active users is expected to reach over 214,000 by year-end, but most Salvadorans do not use Bitcoin for daily transactions.
While the government-backed Chivo Wallet reports 4 million users, technical challenges and public skepticism remain barriers to daily use. The USD still dominates transactions.
A Mature Regulatory Environment
El Salvador has moved from experimental Bitcoin adoption to mature digital asset regulation. The regulatory focus has shifted to compliance, transparency, and international cooperation, positioning El Salvador as a unique hub for digital asset innovation in Latin America.
Early entrants gain first-mover benefits in crypto tourism, fintech, and blockchain-based land registries, backed by a growing tech talent ecosystem and international partnerships.
For businesses considering El Salvador, the country offers a clear path forward. The licensing requirements are stricter than before, but the rewards include tax benefits, regulatory clarity, and access to a government actively promoting crypto innovation.
The future of crypto licensing in El Salvador looks stable and professional. El Salvador has one of the most comprehensive crypto regulatory frameworks in the world, and other countries are reaching out for guidance.
Whether you’re launching an exchange, providing custody services, or tokenizing real-world assets, El Salvador continues to offer one of the clearest regulatory paths in Latin America for digital asset businesses.
