Back to Analyses

El Salvador

Retail_Trading_Status

Allowed-Regulated Unknown
Edit
Analysis ID
#416
Version
Latest
Created
2025-06-26 13:03
Workflow Stage
Live

Executive Summary

Retail cryptocurrency trading is legally permitted in El Salvador, with Bitcoin adopted as legal tender in 2021, though its mandatory acceptance was later removed. The National Commission of Digital Assets (CNAD) regulates Digital Asset Service Providers (DASPs), while the Central Reserve Bank of El Salvador (BCR) licenses Bitcoin Service Providers (BSPs). Cryptocurrency service providers must adhere to AML/KYC regulations, including the Travel Rule, aligning with FATF standards. The legal framework continues to evolve, focusing on regulatory compliance and financial integrity.

Key Pillars

  • Primary Regulator: National Commission of Digital Assets (CNAD) for DASPs and Central Reserve Bank of El Salvador (BCR) for BSPs.
  • Regulatory Approach: Focus on compliance with international AML/KYC standards.
  • Core Compliance Requirements: Mandatory AML and KYC policies, including Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), real-time transaction monitoring, and suspicious activity reporting. Incorporation of the Travel Rule for transactional transparency.
  • Licensing/Registration: Cryptocurrency service providers, including exchanges and wallet providers, are subject to mandatory registration and licensing.

Landmark Laws

  • Bitcoin Law (Ley Bitcoin):
  • Date of issue: June 9, 2021 (effective September 7, 2021).
  • Summary: Initially mandated that all economic agents must accept Bitcoin as a form of payment.
  • Amendments to Bitcoin Law:
  • Date of issue: Early 2025 (reportedly around January/February).
  • Summary: Made the acceptance of Bitcoin by businesses voluntary and discontinued the government's acceptance of Bitcoin for tax payments.
  • Digital Assets Issuance Law (Ley de Emisión de Activos Digitales):
  • Date of issue: January 2023.
  • Summary: Provides a legal structure for the issuance and commercialization of various digital tokens and instruments, creating the CNAD as the primary regulatory authority for DASPs.

Considerations

  • Legal Classification: Bitcoin remains legal tender despite amendments making its acceptance voluntary.
  • Risks and Concerns: International bodies like the IMF have warned about the risks associated with Bitcoin's volatility and its implications for financial stability and consumer protection.
  • Operational Challenges: Reports indicate relatively low usage of Bitcoin by the general population for daily transactions and remittances, with the US dollar still dominating.

Notes

  • Historical Context: El Salvador was the first country to adopt Bitcoin as legal tender in June 2021.
  • Future Plans: The focus has shifted towards ensuring compliance with international financial integrity standards as the regulatory environment develops.
  • Disclaimers: Some sources indicate relatively low usage of Bitcoin despite government promotion, including initiatives like the Chivo digital wallet.
  • Retail Access: The Central Reserve Bank's registry of Bitcoin Service Providers describes its services as aimed at persons interested in operating digital assets, including retail users who require accessible solutions for sending, receiving, and converting cryptocurrencies.

Detailed Explanation

In El Salvador, individual citizens and residents are legally permitted to buy, sell, and hold cryptocurrencies. This status was formalized with the adoption of Bitcoin as legal tender alongside the US dollar in June 2021, making El Salvador the first country to do so. The 'Bitcoin Law' (Ley Bitcoin), published on June 9, 2021, and effective from September 7, 2021, initially mandated that all economic agents accept Bitcoin as a form of payment. However, significant amendments to the Bitcoin Law were approved in early 2025, around January/February, influenced by an agreement with the International Monetary Fund (IMF) for a $1.4 billion loan. These changes made the acceptance of Bitcoin by businesses voluntary, and the government discontinued its acceptance for tax payments. Despite these modifications, Bitcoin remains legal tender.

El Salvador has also established a broader framework for other digital assets through the 'Digital Assets Issuance Law' (Ley de Emisión de Activos Digitales), enacted in January 2023. This law provides a legal structure for the issuance and commercialization of digital tokens and instruments. It also established the National Commission of Digital Assets (Comisión Nacional de Activos Digitales - CNAD) as the primary regulatory authority for Digital Asset Service Providers (DASPs). The Central Reserve Bank of El Salvador (Banco Central de Reserva - BCR) is responsible for licensing Bitcoin Service Providers (BSPs).

Cryptocurrency service providers, including exchanges and wallet providers, are subject to specific regulations, including mandatory registration and licensing. They must implement robust Anti-Money Laundering (AML) and Know Your Customer (KYC) policies in line with international standards set by the Financial Action Task Force (FATF). These policies include customer due diligence (CDD), enhanced due diligence (EDD) for high-risk clients, real-time transaction monitoring, and reporting suspicious activities. The 'Travel Rule,' which requires transactional transparency, is also incorporated into El Salvador's AML regulations for Virtual Asset Service Providers (VASPs).

While the government actively promoted Bitcoin adoption initially, actual usage by the general population for daily transactions and remittances has been reported as relatively low, with the US dollar still dominating. International bodies like the IMF have issued warnings regarding the risks associated with Bitcoin's volatility and its implications for financial stability and consumer protection. The Central Reserve Bank's registry of Bitcoin Service Providers describes its services as aimed at 'PERSONAS NATURALES Y JURÍDICAS CON INTERÉS EN OPERAR ACTIVOS DIGITALES EN EL SALVADOR, INCLUYENDO USUARIOS RETAIL QUE REQUIEREN SOLUCIONES ACCESIBLES DE ENVÍO, RECEPCIÓN Y CONVERSIÓN DE CRIPTOMONEDAS...' (NATURAL AND LEGAL PERSONS WITH AN INTEREST IN OPERATING DIGITAL ASSETS IN EL SALVADOR, INCLUDING RETAIL USERS WHO REQUIRE ACCESSIBLE SOLUTIONS FOR SENDING, RECEIVING, AND CONVERTING CRYPTOCURRENCIES...). Despite concerns and legal amendments, the legal framework in El Salvador explicitly allows retail cryptocurrency trading, albeit under a developing and increasingly regulated environment, with a focus on compliance with international financial integrity standards.

Summary Points

El Salvador: Retail Cryptocurrency Trading Status (2025)

Overall Status: Allowed-Regulated. Individual citizens and residents are legally permitted to buy, sell, and hold cryptocurrencies.

1. Key Regulatory Bodies:

  • National Commission of Digital Assets (CNAD):
    • Primary regulatory authority for Digital Asset Service Providers (DASPs).
    • Grants DASP licenses for businesses handling cryptocurrencies other than Bitcoin.
  • Central Reserve Bank of El Salvador (Banco Central de Reserva - BCR):
    • Responsible for licensing Bitcoin Service Providers (BSPs).
    • Issues registration certificates for BSPs.

2. Key Legislation and Regulations:

  • Bitcoin Law (Ley Bitcoin) - 2021:
    • Initially made Bitcoin legal tender alongside the US dollar.
    • Originally mandated all economic agents to accept Bitcoin as payment.
  • Amendments to Bitcoin Law - Early 2025:
    • Made acceptance of Bitcoin by businesses voluntary.
    • Government discontinued accepting Bitcoin for tax payments.
    • Bitcoin remains legal tender but is no longer considered "currency".
  • Digital Assets Issuance Law (Ley de Emisión de Activos Digitales) - January 2023:
    • Provides a legal structure for the issuance and commercialization of various digital tokens and instruments.
    • Allows public or private issuers to raise funding through public offerings of tokenized assets.

3. Requirements for Compliance (Cryptocurrency Service Providers):

  • Registration and Licensing: Mandatory for cryptocurrency service providers (exchanges, wallet providers, etc.).
    • Bitcoin Service Provider (BSP) License: For companies dealing exclusively with Bitcoin.
    • Digital Asset Service Provider (DASP) License: For businesses handling other cryptocurrencies or digital assets.
  • Anti-Money Laundering (AML) and Know Your Customer (KYC) Policies:
    • Must be in line with international standards (e.g., FATF Recommendations).
    • Customer Due Diligence (CDD).
    • Enhanced Due Diligence (EDD) for high-risk clients.
    • Real-time transaction monitoring.
    • Reporting suspicious activities.
    • Implementation of the "Travel Rule" for transactional transparency.
  • Record Keeping: Accurate records of all money transactions.
  • Identity Verification: Solid identity checks for customers.

4. Notable Restrictions or Limitations:

  • Voluntary Bitcoin Acceptance: Businesses are no longer required to accept Bitcoin.
  • Limited Government Involvement: Government has scaled back its direct involvement in initiatives like the Chivo Wallet.
  • Low Adoption: Actual usage of Bitcoin by the general population for daily transactions and remittances is reportedly low.
  • IMF Warnings: International bodies like the IMF have issued warnings regarding the risks associated with Bitcoin's volatility and its implications for financial stability and consumer protection.

5. Recent Developments or Changes:

  • Early 2025 Amendments to Bitcoin Law: Significant changes to the original legislation, driven by an agreement with the IMF.
  • January 2023 Enactment of Digital Assets Issuance Law: Establishment of a broader framework for digital assets beyond Bitcoin.
  • Licensing of Major Exchanges: The Central Reserve Bank has issued licenses to major cryptocurrency exchanges like Binance.
  • Increased Regulatory Scrutiny: Focus has shifted towards ensuring compliance with international financial integrity standards.

Full Analysis Report

Report on Retail Cryptocurrency Trading Status in El Salvador

Date: 2025-06-26

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

Retail_Trading_Status

Identified Status: Allowed-Regulated

Detailed Narrative Explanation:

Individual citizens and residents in El Salvador are legally permitted to buy, sell, and hold cryptocurrencies. This was formally established in June 2021 when El Salvador made history by becoming the first country in the world to adopt Bitcoin as legal tender alongside the US dollar. The "Bitcoin Law" (Ley Bitcoin) came into effect on September 7, 2021. This law initially mandated that all economic agents must accept Bitcoin as a form of payment when offered.

However, significant amendments to the Bitcoin Law were approved in early 2025 (reportedly around January/February). These changes, largely influenced by an agreement with the International Monetary Fund (IMF) for a $1.4 billion loan, altered key aspects of the original legislation. Notably, the mandatory acceptance of Bitcoin by businesses became voluntary. Furthermore, the government discontinued the acceptance of Bitcoin for tax payments and began to scale back its direct involvement in initiatives like the state-backed Chivo Wallet. Despite these modifications, Bitcoin remains legal tender in the country, and individuals are still permitted to transact with it.

Beyond Bitcoin, El Salvador has also established a broader framework for other digital assets. The "Digital Assets Issuance Law" (Ley de Emisión de Activos Digitales), enacted in January 2023, provides a legal structure for the issuance and commercialization of various digital tokens and instruments. This law created the National Commission of Digital Assets (Comisión Nacional de Activos Digitales - CNAD) as the primary regulatory authority for overseeing Digital Asset Service Providers (DASPs). The Central Reserve Bank of El Salvador (Banco Central de Reserva - BCR) is responsible for licensing Bitcoin Service Providers (BSPs).

Cryptocurrency service providers, including exchanges and wallet providers, are subject to specific regulations. These include mandatory registration and licensing. Crucially, these entities must implement robust Anti-Money Laundering (AML) and Know Your Customer (KYC) policies in line with international standards, such as those set by the Financial Action Task Force (FATF). This includes customer due diligence (CDD), enhanced due diligence (EDD) for high-risk clients, real-time transaction monitoring, and reporting suspicious activities. The "Travel Rule," which requires transactional transparency, is also incorporated into El Salvador's AML regulations for Virtual Asset Service Providers (VASPs).

While the government actively promoted Bitcoin adoption initially, including launching the Chivo digital wallet and installing Bitcoin ATMs, the actual usage by the general population for daily transactions and remittances has been reported as relatively low by some sources, with the US dollar still dominating. There have also been warnings from international bodies like the IMF regarding the risks associated with Bitcoin's volatility and its implications for financial stability and consumer protection. Despite these concerns and the recent legal amendments, the legal framework in El Salvador explicitly allows for retail cryptocurrency trading, albeit under a developing and increasingly regulated environment. The focus has shifted towards ensuring compliance with international financial integrity standards.

Specific, Relevant Text Excerpts:

  • Bitcoin Law (2021): "On June 9th, 2021, El Salvador's government published in the official gazette the legislation making the digital currency Bitcoin legal tender within the country. The legislation went into effect on September 7th, 2021."
  • Bitcoin Law (2021, initial mandate): "All economic actors must accept Bitcoin as a form of payment."
  • Amendments to Bitcoin Law (early 2025): "El Salvador's Legislative Assembly has amended its Bitcoin Law, making it optional for businesses to accept Bitcoin as payment. The change comes as part of the conditions set by the International Monetary Fund (IMF) for a $1.4 billion loan... The recent reforms allow businesses to choose whether to accept Bitcoin, and the government will no longer accept Bitcoin for tax payments." Another source states, "Under the new rules, bitcoin is no longer considered 'currency,' though it remains 'legal tender.' Another change makes using bitcoin entirely voluntary."
  • Digital Assets Issuance Law (2023): "In January 2023, a new Digital Assets Law was approved encouraging the adoption of other crypto assets and the development of crypto markets... With the new law, any public or private issuer will be allowed to raise funding through public offerings of tokenized assets". Another source mentions, "Entre las regulaciones más relevantes se encuentran la Ley de Activos Digitales y la Ley de Emisión de Activos Digitales, esta última emitida en 2023, que vino a complementar el marco jurídico existente, brindando reglas claras tanto para la emisión como para la comercialización de tokens y otros instrumentos digitales." (Among the most relevant regulations are the Digital Assets Law and the Digital Assets Issuance Law, the latter issued in 2023, which complemented the existing legal framework, providing clear rules for both the issuance and commercialization of tokens and other digital instruments.)
  • Regulatory Bodies and Licensing: "El Salvador crypto license has two primary types: Bitcoin Service Provider (BSP) license for companies dealing exclusively with Bitcoin... and Digital Asset Service Provider (DASP) license for businesses handling other cryptocurrencies or digital assets". "CNAD – Regula y otorga la Licencia DASP. Banco Central de Reserva (BCR) – Se encarga exclusivamente del proceso de licencia Bitcoin y emite el certificado de Registro." (CNAD – Regulates and grants the DASP License. Central Reserve Bank (BCR) – Is exclusively in charge of the Bitcoin license process and issues the Registration certificate.)
  • AML/KYC Requirements: "El Salvador requires cryptocurrency companies to set up anti-money laundering (AML) and know your customer (KYC) policies aligned with FATF Recommendations, including the 'Travel Rule' for transactional transparency and El Salvador's Digital Assets Issuance Law." "LEAD [Digital Assets Issuance Law] and its updates have made the rules for Know Your Customer (KYC) more challenging for crypto businesses. Now, these companies must keep accurate records of all money transactions and ensure customers go through a solid identity check."
  • Retail Access: The Central Reserve Bank's registry of Bitcoin Service Providers describes its services as aimed at: "PERSONAS NATURALES Y JURÍDICAS CON INTERÉS EN OPERAR ACTIVOS DIGITALES EN EL SALVADOR, INCLUYENDO USUARIOS RETAIL QUE REQUIEREN SOLUCIONES ACCESIBLES DE ENVÍO, RECEPCIÓN Y CONVERSIÓN DE CRIPTOMONEDAS..." (NATURAL AND LEGAL PERSONS WITH AN INTEREST IN OPERATING DIGITAL ASSETS IN EL SALVADOR, INCLUDING RETAIL USERS WHO REQUIRE ACCESSIBLE SOLUTIONS FOR SENDING, RECEIVING, AND CONVERTING CRYPTOCURRENCIES...).

Direct, Accessible URL Links to Sources:

  1. (No specific URL directly supports the initial overview, but the subsequent sources collectively build this picture)
  2. Legal Nodes (2025-05-22): https://legalnodes.com/article/crypto-license-el-salvador
  3. Prifinance (Date not specified, content appears current for 2025): https://prifinance.com/es/crypto-licenses/el-salvador/
  4. SWI swissinfo.ch (2023-08-09): https://www.swissinfo.ch/spa/el-salvador-otorga-licencias-a-la-mayor-plataforma-de-criptomonedas-en-el-mundo--binance/48720004
  5. Offshore Pro Group (Date not specified, content appears current for 2025): https://offshore.pro/en/blog/crypto-license-in-el-salvador/
  6. Mielo Group (2025-06-04): https://mielogroup.com/el-salvadors-regulatory-landscape-for-digital-asset-businesses/
  7. Latam Business Law (Date not specified, content appears current for 2025): https://www.latam.law/es/servicios/licencia-de-criptomonedas-en-el-salvador-dasp/
  8. Q Wealth Report (2025-04-15): https://qwealthreport.com/es/licencia-cripto-en-el-salvador-2025/
  9. Regulated United Europe (Date not specified, content appears current for 2025): https://rue.ee/es/crypto-license-in-el-salvador
  10. Gofaizen & Sherle (Date not specified, content appears current for 2025): https://gofaizen-sherle.com/crypto-license-in-el-salvador
  11. Fintech Harbor Consulting (Date not specified, content appears current for 2025): https://fintechharbor.com/crypto-license-in-el-salvador/
  12. Forex News by FX Leaders (2025-02-15): https://www.fxleaders.com/news/el-salvadors-bitcoin-law-update-what-you-need-to-know/
  13. SBSB Fintech Lawyers (Date not specified, content appears current for 2025): https://sbsb.legal/crypto-license/el-salvador-license/
  14. PwC (Report dated from context of Bitcoin Law passage, likely late 2021/early 2022): https://www.pwc.com/gx/en/financial-services/pdf/el-salvador-s-law-a-meaningful-test-for-bitcoin.pdf
  15. Wikipedia - Bitcoin in El Salvador (Page likely updated, reflects events into 2024/2025): https://en.wikipedia.org/wiki/Bitcoin_in_El_Salvador
  16. IMF Staff Country Reports (2025-03-19): https://www.elibrary.imf.org/view/journals/002/2025/068/article-A003-en.xml
  17. Council of Europe (Presentation likely from late 2021 or 2022 based on content): https://rm.coe.int/regulation-of-cryptocurrencies-the-experience-in-el-salvador-en/1680a5ea61
  18. Digital Watch Observatory (2025-02-03): https://dig.watch/updates/el-salvador-makes-bitcoin-acceptance-optional-for-businesses
  19. Cointelegraph (Español) (2025-01-30): https://es.cointelegraph.com/news/el-salvador-enacts-new-bitcoin-law-to-comply-with-imf-deal
  20. Eternity Law (Date not specified, content appears current for 2025): https://eternitylaw.com/licenses/el-salvador-crypto-license/
  21. Fast Offshore Licenses (Date not specified, content appears current for 2025): https://fastoffshorelicenses.com/offshore-crypto-license/el-salvador/
  22. Central Banking (2023-08-10): https://www.centralbanking.com/fintech/crypto-assets/7957908/el-salvadors-central-bank-licenses-binance
  23. Ars Technica (2025-02-03): https://arstechnica.com/tech-policy/2025/02/el-salvador-walks-back-its-bitcoin-law-ending-its-status-as-legal-currency/
  24. Council of Europe (Español - Presentation likely from late 2021 or 2022 based on content): https://rm.coe.int/regulacion-sobre-criptomonedas-la-experiencia-en-el-salvador-/1680a5ea60
  25. elEconomista.es (2025-04-13): https://www.eleconomista.es/mercados-cotizaciones/noticias/12773433/04/25/el-89-de-proveedores-de-servicios-bitcoin-en-el-salvador-no-operan-segun-el-banco-central.html
  26. FXLeaders (2024-10-04): https://www.fxleaders.com/news/2024/10/04/more-oversight-needed-for-bitcoin-imf-warns-el-salvador-government/
  27. Revista E&N (2025-01-30): https://www.revistaeyn.com/empresas-y-negocios/el-salvador-reforma-la-ley-bitcoin-y-elimina-su-aceptacion-obligatoria-DF17990080
  28. Banco Central de Reserva de El Salvador (Website, accessed 2025-06-26): https://www.bcr.gob.sv/registro-de-proveedores-de-servicios-bitcoin/
  29. Cointelegraph (Español) (2024-03-26): https://es.cointelegraph.com/news/el-salvador-bank-claims-bitcoin-operations-minimal-country
  30. Binance News (2025-02-02): https://www.binance.com/en/square/post/el-salvador-s-betrayal-the-warning-brought-by-bitcoin-s-plunge-again-335009085808
  31. Crypto Daily (2025-05-20): https://cryptodaily.co.uk/news-in-crypto/investing.com:el-salvador-to-continue-buying-btc-despite-imf-warning
  32. Gobierno de El Salvador - Inclusión Financiera (Website, content likely from 2021): https://www.inclusionfinanciera.gob.sv/bitcoin-en-el-salvador/
  33. Bitrue (2025-06-02): https://www.bitrue.com/blog/el-salvador-buys-more-bitcoin-ignores-imf-warnings
  34. elEconomista.es (2024-12-05): https://www.eleconomista.es/mercados-cotizaciones/noticias/12563831/12/24/la-gran-apuesta-de-bukele-por-el-bitcoin-genera-cientos-de-millones-de-dolares-para-el-salvador-en-plusvalias-latentes.html
  35. Revista Centroamericana de Administración Pública (Date not specified, likely post-Bitcoin Law): https://icap.ac.cr/rcap/article/view/525/996
  36. Cointribune (2025-04-16): https://www.cointribune.com/en/bitcoin-in-el-salvador-only-11-of-registered-businesses-are-active/
  37. Marketplace (2023-11-08): https://www.marketplace.org/2023/11/08/has-el-salvadors-bitcoin-gamble-paid-off/

Web Sources (36)

Sources discovered via web search grounding

Search queries used (12)
  • El Salvador cryptocurrency regulation retail
  • El Salvador Bitcoin law retail trading
  • AML KYC crypto El Salvador
  • Central Reserve Bank El Salvador crypto retail
  • retail crypto trading license El Salvador
  • warnings retail crypto trading El Salvador
  • El Salvador regulación criptomonedas minorista
  • Ley Bitcoin El Salvador compra venta particulares
  • Requisitos AML KYC cripto El Salvador
  • Banco Central de Reserva El Salvador cripto minorista
  • licencia plataformas cripto El Salvador
  • advertencias trading criptomonedas El Salvador particulares
Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Reviews

No reviews yet

Submit Review

Challenge: Disagree with the analysis | Approval: Confirm it's correct | Refinement: Suggest improvements