El Salvador
Retail_Trading_Status
- Analysis ID
- #650
- Version
- Latest
- Created
- 2025-12-12 04:08
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- 07f85e1c...
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Executive Summary
Retail crypto trading is legal and comprehensively regulated in El Salvador under a dual-track framework distinguishing Bitcoin from other digital assets. While Bitcoin retains 'legal tender' status, significant amendments in January 2025 made its acceptance by merchants voluntary rather than mandatory and removed the option to pay taxes in Bitcoin to align with IMF loan conditions. The Central Reserve Bank (BCR) oversees Bitcoin Service Providers, while the National Commission of Digital Assets (CNAD) actively licenses platforms for all other digital assets.
Key Pillars
Central Reserve Bank (BCR) - Registers and regulates Bitcoin Service Providers (PSBs)
National Commission of Digital Assets (CNAD) - Licenses and supervises Digital Asset Service Providers (DASPs) for non-Bitcoin assets
Superintendency of the Financial System (SSF) - Oversees financial compliance and anti-money laundering (AML) adherence
Financial Investigation Unit (UIF) - Enforces AML/CFT reporting requirements for all crypto entities
Landmark Laws
Bitcoin Law (Ley Bitcoin) (Legislative Decree No. 57 (Amended by Decree No. 199)) - Enacted: 2021-06-08
- Established Bitcoin as legal tender. Major amendments in January 2025 (Decree No. 199) repealed the mandatory acceptance clause (Art. 7) and the state's obligation to provide automatic convertibility, making Bitcoin use voluntary.
- Source
Digital Assets Issuance Law (Ley de Emisión de Activos Digitales) (Legislative Decree No. 644) - Enacted: 2023-01-11
- Created the National Commission of Digital Assets (CNAD) and established a licensing regime for issuers and service providers of non-Bitcoin digital assets. Amended in August 2024 to expand CNAD's powers.
- Source
General Regulation of the Bitcoin Law (Decree No. 27) - Enacted: 2021-08-27
- Operational rules for the Bitcoin Law, establishing the Registry of Bitcoin Service Providers at the BCR and defining KYC/AML obligations.
- Source
Considerations
Dual Regulatory Regime: Bitcoin is regulated by the Central Bank (BCR), while all other cryptos (ETH, stablecoins, tokens) are regulated by the CNAD.
Voluntary Acceptance: As of 2025, merchants are no longer legally required to accept Bitcoin, reversing the 2021 mandate.
Tax Payments: The 2025 reform repealed the provision allowing taxes to be paid in Bitcoin.
Tax Exemptions: The Digital Assets Law provides significant tax exemptions (income, capital gains) for licensed issuers and service providers, though this primarily benefits businesses rather than retail traders.
IMF Influence: Recent regulatory rollbacks (voluntary acceptance, removal of government wallet subsidies) were explicitly tied to securing a $1.4 billion IMF loan.
Notes
The 2025 amendments represent a maturation of the market rather than a ban. By removing the coercive elements of the 2021 law (mandatory acceptance), El Salvador has aligned its framework closer to international standards while maintaining a fully regulated, legal environment for crypto assets.
Remaining Uncertainties
- The exact operational status of the Chivo Wallet following the 'unwinding' of government involvement mentioned in 2025 reports.
- Whether the repeal of tax payment in Bitcoin applies to all tax types or just specific state obligations, as legal interpretations vary.
Detailed Explanation
Detailed Explanation
Retail cryptocurrency trading is legal and comprehensively regulated in El Salvador under a dual-track framework that distinguishes Bitcoin from all other digital assets. The country's status is 'Allowed-Regulated.' The regulatory framework is built upon landmark legislation, primarily the Bitcoin Law (Legislative Decree No. 57), enacted in June 2021, which originally established Bitcoin as legal tender. This law was significantly amended by Decree No. 199 in January 2025, repealing the mandatory acceptance clause for merchants and removing the state's obligation to provide automatic convertibility, thereby making Bitcoin use voluntary. The Digital Assets Issuance Law (Legislative Decree No. 644), enacted in January 2023, created a separate licensing regime for non-Bitcoin digital assets and established the National Commission of Digital Assets (CNAD). The General Regulation of the Bitcoin Law (Decree No. 27) provides operational rules for Bitcoin service providers. This dual regulatory regime means Bitcoin Service Providers (PSBs) are registered and overseen by the Central Reserve Bank (BCR), while Digital Asset Service Providers (DASPs) handling all other assets like Ethereum or stablecoins are licensed and supervised by the CNAD. The Superintendency of the Financial System (SSF) oversees broader financial compliance, and the Financial Investigation Unit (UIF) enforces anti-money laundering and counter-terrorist financing (AML/CFT) reporting requirements for all crypto entities. Key compliance requirements stem from these laws and include registration or licensing with the respective authority (BCR for Bitcoin, CNAD for other assets) and adherence to KYC/AML obligations. Notable restrictions include the 2025 amendments that made Bitcoin acceptance by merchants voluntary rather than mandatory and repealed the provision allowing taxes to be paid in Bitcoin. These changes were influenced by conditions for securing a $1.4 billion IMF loan. The Digital Assets Law provides significant tax exemptions for licensed businesses, though this primarily benefits issuers and service providers rather than individual retail traders. The 2025 amendments represent a market maturation, aligning El Salvador's framework closer to international standards while maintaining a fully regulated, legal environment for all crypto assets.
Summary Points
Structured Summary
I. Regulatory Status
* Retail cryptocurrency trading is legal and comprehensively regulated.
* The country operates under a dual-track framework, distinguishing Bitcoin from all other digital assets.
* The official status is Allowed-Regulated.
II. Key Regulatory Bodies
* Central Reserve Bank (BCR): Registers and regulates Bitcoin Service Providers (PSBs).
* National Commission of Digital Assets (CNAD): Licenses and supervises Digital Asset Service Providers (DASPs) for all non-Bitcoin assets.
* Superintendency of the Financial System (SSF): Oversees general financial compliance and anti-money laundering (AML) adherence.
* Financial Investigation Unit (UIF): Enforces AML/CFT reporting requirements for all crypto entities.
III. Important Legislation
* Bitcoin Law (Legislative Decree No. 57), enacted 2021-06-08.
* Established Bitcoin as legal tender.
* Amended by Decree No. 199 in January 2025 to repeal mandatory merchant acceptance and government convertibility obligations.
* Digital Assets Issuance Law (Legislative Decree No. 644), enacted 2023-01-11.
* Created the CNAD and established a licensing regime for non-Bitcoin digital asset issuers and service providers.
* Amended in August 2024 to expand CNAD's powers.
* General Regulation of the Bitcoin Law (Decree No. 27), enacted 2021-08-27.
* Provides operational rules, establishes the BCR Registry for Bitcoin Service Providers, and defines KYC/AML obligations.
IV. Compliance Requirements
* Entities must register or obtain a license from the appropriate regulator:
* Bitcoin Service Providers (PSBs) must register with the Central Reserve Bank (BCR).
* Digital Asset Service Providers (DASPs) for non-Bitcoin assets must be licensed by the National Commission of Digital Assets (CNAD).
* All entities must adhere to KYC/AML obligations and reporting requirements enforced by the SSF and UIF.
V. Notable Restrictions or Limitations
* As of January 2025, merchant acceptance of Bitcoin is voluntary, not mandatory.
* The option for taxpayers to pay taxes in Bitcoin was repealed in the 2025 amendments.
* The state's obligation to provide automatic convertibility between Bitcoin and US dollars was removed.
VI. Recent Developments or Notes
* The January 2025 amendments to the Bitcoin Law represent a maturation of the market and an alignment with international standards.
* These regulatory rollbacks were explicitly tied to securing a $1.4 billion IMF loan.
* The Digital Assets Law provides significant tax exemptions (income, capital gains) for licensed issuers and service providers, primarily benefiting businesses.
* The framework maintains a fully regulated, legal environment for all crypto assets despite the 2025 changes.
Full Analysis Report
Full Analysis Report
As of late 2025, El Salvador maintains a unique 'Allowed-Regulated' environment for retail crypto trading, characterized by a sophisticated dual-track legal framework. The country distinguishes between Bitcoin, which holds 'legal tender' status, and all other digital assets, which are regulated as securities or alternative assets. Retail investors can freely buy, sell, and hold cryptocurrencies through a variety of regulated platforms. The Central Reserve Bank (BCR) maintains a registry of 'Bitcoin Service Providers' (PSBs), while the National Commission of Digital Assets (CNAD) has issued over 60 licenses to 'Digital Asset Service Providers' (DASPs), including major global exchanges like Bitfinex and Binance.
The regulatory landscape underwent a significant shift in January 2025. To secure a $1.4 billion loan from the International Monetary Fund (IMF), the Legislative Assembly passed Decree No. 199, which amended the landmark 2021 Bitcoin Law. Crucially, this amendment repealed Article 7, which had mandated that all economic agents accept Bitcoin. Consequently, Bitcoin acceptance is now entirely voluntary for merchants. Furthermore, the amendment removed the state's obligation to provide automatic, instant convertibility of Bitcoin to USD and eliminated the option for citizens to pay government taxes in Bitcoin. Despite these rollbacks, Bitcoin remains legal tender, and the government continues to hold strategic Bitcoin reserves.
For retail traders, these changes normalize the market environment. While the 'forced' adoption is gone, the infrastructure for trading remains robust and fully legal. The CNAD has become a prominent regulator for the broader crypto market, enforcing strict AML/CFT standards and capital requirements for exchanges. The Digital Assets Issuance Law (LEAD) provides legal certainty for token issuance and stablecoins, creating a safe harbor for non-Bitcoin assets that was previously ambiguous. The government has also gradually reduced its direct intervention in the retail market by unwinding subsidies for the state-run 'Chivo Wallet'.
Compliance is strictly enforced. Bitcoin Service Providers must register with the BCR and comply with the Financial Investigation Unit's (UIF) anti-money laundering regulations. Similarly, DASPs must undergo a rigorous licensing process with the CNAD, which includes disclosing beneficial ownership and operational security protocols. This comprehensive licensing regime confirms the 'Allowed-Regulated' status, as the government actively oversees the sector rather than merely tolerating it or banning it.
As of late 2025, El Salvador maintains a unique 'Allowed-Regulated' environment for retail crypto trading, characterized by a sophisticated dual-track legal framework. The country distinguishes between Bitcoin, which holds 'legal tender' status, and all other digital assets, which are regulated as securities or alternative assets. Retail investors can freely buy, sell, and hold cryptocurrencies through a variety of regulated platforms. The Central Reserve Bank (BCR) maintains a registry of 'Bitcoin Service Providers' (PSBs), while the National Commission of Digital Assets (CNAD) has issued over 60 licenses to 'Digital Asset Service Providers' (DASPs), including major global exchanges like Bitfinex and Binance. The regulatory landscape underwent a significant shift in January 2025. To secure a $1.4 billion loan from the International Monetary Fund (IMF), the Legislative Assembly passed Decree No. 199, which amended the landmark 2021 Bitcoin Law. Crucially, this amendment repealed Article 7, which had mandated that all economic agents accept Bitcoin. Consequently, Bitcoin acceptance is now entirely voluntary for merchants. Furthermore, the amendment removed the state's obligation to provide automatic, instant convertibility of Bitcoin to USD and eliminated the option for citizens to pay government taxes in Bitcoin. Despite these rollbacks, Bitcoin remains legal tender, and the government continues to hold strategic Bitcoin reserves. For retail traders, these changes normalize the market environment. While the 'forced' adoption is gone, the infrastructure for trading remains robust and fully legal. The CNAD has become a prominent regulator for the broader crypto market, enforcing strict AML/CFT standards and capital requirements for exchanges. The Digital Assets Issuance Law (LEAD) provides legal certainty for token issuance and stablecoins, creating a safe harbor for non-Bitcoin assets that was previously ambiguous. The government has also gradually reduced its direct intervention in the retail market by unwinding subsidies for the state-run 'Chivo Wallet'. Compliance is strictly enforced. Bitcoin Service Providers must register with the BCR and comply with the Financial Investigation Unit's (UIF) anti-money laundering regulations. Similarly, DASPs must undergo a rigorous licensing process with the CNAD, which includes disclosing beneficial ownership and operational security protocols. This comprehensive licensing regime confirms the 'Allowed-Regulated' status, as the government actively oversees the sector rather than merely tolerating it or banning it.
Source Evidence
Primary and secondary sources cited in this analysis
"References to Bitcoin as a legal tender have been deleted... rendering its use optional."
"El Registro de Proveedores de Servicios de Bitcoin fue creado según lo establecido en el Artículo 3 del Reglamento de la Ley Bitcoin."
"CNAD is the institution in charge of the LEAD application... and approving the issuance of digital assets."
"At the end of January, on a vote of 55-2, El Salvador's Legislative Assembly passed modifications to the Bitcoin law... Users are now free to accept Bitcoin or not."
"Acceptance of Bitcoin is now optional, reversing the 2021 law that made it legal tender."
Web Sources (10)
Sources discovered via web search grounding
Search queries used (5)
- El Salvador Bitcoin Law current status 2025
- CNAD El Salvador regulations for crypto exchanges
- Banco Central de Reserva El Salvador Registro de Proveedores de Servicios de Bitcoin
- El Salvador Digital Assets Issuance Law CNAD licensed providers
- El Salvador cryptocurrency regulation retail trading status 2024 2025
https://gfintegrity.org/changes-to-the-digital-assets-issuance-law-in-el-salvador/
https://mielogroup.com/el-salvadors-regulatory-landscape-for-digital-asset-businesses/
https://legalaes.com/crypto-license-in-el-salvador/
https://www.trmlabs.com/reports-and-whitepapers/global-crypto-policy-review-outlook-2025-26
https://blplegal.com/major-changes-to-el-salvadors-bitcoin-law/
https://gfmag.com/economics-policy-regulation/el-salvador-drops-bitcoin-legal-tender/
https://www.eternitylaw.com/news/crypto-license-in-el-salvador-2025/
https://coinfomania.com/crypto-regulations-in-el-salvador/
https://reason.com/2025/02/03/el-salvador-walks-back-its-bitcoin-law/
https://offshore-expert.com/crypto-license-in-el-salvador/