Digital Assets Issuance Law (2023) — El Salvador

The law’s object is to establish legal certainty for transfers of digital assets used in public offerings carried out in El Salvador. It also regulates requirements for issuers, service providers, and other participants, with stated objectives of market development and purchaser protection.

Article 2 applies the framework to public offerings of digital assets in El Salvador and to covered issuers, service providers, and other participants. Article 3 defines a digital asset as a digital representation stored and transferred electronically using distributed ledger technology or similar technology. The law states that covered digital assets are not securities under several named Salvadoran securities and commercial statutes, while the 2023 amendment added enforceability treatment for certain CNAD-authorized certifications.

The law creates the Comisión Nacional de Activos Digitales, or CNAD, as the primary authority for the framework. CNAD applies the law, its regulations, and other rules for public offerings. Its powers include enabling, suspending, or canceling public offerings; maintaining registries for issuers, certifiers, service providers, and offerings; authorizing or canceling service-provider registrations; supervising covered participants; imposing sanctions; and issuing technical standards, guides, and instructions.

Digital asset service providers may offer covered services only if registered with CNAD. The service list includes exchanging digital assets for fiat or other digital assets, operating trading platforms, underwriting or pricing issuances, placing assets on platforms or wallets, promoting and administering investment products, and, for third parties, transfer, custody, order reception, and order execution services. The consolidated text also reflects a 2023 amendment adding certification services for covered digital assets and smart contracts.

Issuers are responsible for the accuracy of information provided in public offerings and to certifiers and CNAD. They must maintain mechanisms to control and safeguard funds or other digital assets obtained during public offerings and explain custody arrangements. When carrying out a public offering, issuers must communicate material aspects clearly and without misleading statements, maintain electronic records, prepare financial statements when requested, and keep relevant offering information available through a URL.

Article 32 requires each issuer planning a public offering to prepare a Documento de Información Relevante. That document must be certified by an authorized certifier and submitted to CNAD for habilitation. Once an issuance is enabled, CNAD makes the document available to potential purchasers through its URL.

The framework includes conduct rules for pricing transparency, user information, purchaser identification, market integrity, and market manipulation. Issuers and service providers must avoid false or misleading signals about an offer, demand, or price; coordinated price setting; fictitious or deceptive transactions; and other conduct that seriously affects market stability or integrity.

Article 36 provides tax benefits for covered issuers, registered service providers, certifiers, purchasers, and public offerings. The text states that nominal value, returns, income, capital gains, and certain ordinary income from covered digital assets are exempt from specified taxes, while limiting those benefits when transactions involve exchanges for goods or services outside Article 19 activities.

As of this profile, the Supreme Court of Justice’s legal database lists the law’s status as Vigente and notes Legislative Decree No. 781, dated June 27, 2023 and published July 17, 2023, as a reform. Editors should review CNAD’s current regulations and public registries because operational requirements are developed in subordinate rules and guidance.