El Salvador lawmakers to consider regulation for issuing digital assets

Quick Take

  • El Salvador’s legislative assembly is considering a long-awaited law to regulate digital asset service providers.
  • The Central American country made bitcoin legal tender in September 2021. 

A committee within El Salvador's Legislative Assembly is considering a long-awaited law aimed at regulating digital asset service providers and issuers in the country. 

The so-called "digital asset issuance law" would create a legal framework for companies offering digital assets in El Salvador, and create a national commission tasked with overseeing their certification and operations.

The proposed digital asset law is now with the Legislative Assembly's economic committee, according to a document seen by The Block and corroborated by a broadcast of a Nov. 22 plenary session. 

The new law would have the "aim of promoting the efficient development of the digital asset market and protecting the interests of the acquirers," according to the text. 

It is significant because it broadly references digital assets, instead of narrowly focusing on bitcoin, which El Salvador adopted as legal tender in September 2021. However, this latest proposal focuses on providing standards for offering digital assets to the public rather than making other cryptocurrencies legal tender. 

Digital asset service providers in El Salvador would have to complete a registration process and follow several rules under the proposed law. These entities would have to provide a list of digital assets they plan to offer, including their "benefits, restrictions and limits." They would also have to demonstrate cybersecurity precautions and customer service capabilities, as well as providing the names and titles of company employees.

Issuers of digital assets would also have to follow certain rules, such as disclosing information about the jurisdictions or countries where they operate.

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