Country overview

El Salvador

Country stats

Rating Points

420

This indicator describes the overall rating of a given jurisdiction on several parameters according to cryptocurrency operations - market volume, crypto regulation, business climate, taxation framework.

Crypto Penetration

1.7%

Estimated percentage of crypto users out of the country's total population based on public data.

Legal Entities

Number of crypto companies registered in the country based on regulator data if available or other types of public data.

Regulation Points

200

An overall assessment of the granularity of crypto regulation in a given country. A high score is also given to countries where cryptocurrency transactions are highly regulated.

Amount of crypto users

107 100

Total amount of crypto users out of the country's total population based on public data.

Taxation points

This figure, according to our analysts' calculations, indicates the overall level of tax burden for cryptocurrency transactions in a given country. The higher the indicator, the lower the burden.

Market volume points

57.1

A rough estimate of this jurisdiction's retail crypto market relative to the rest of the world. The higher the indicator, the higher the market potential.

Status of crypto

Legally allowed

General status of cryptocurrency regulation in this jurisdiction.

Crypto payments

️Legal Tender

The legal status of cryptocurrency payments for goods and services in a given country based on information from regulators, public data and feedback from our community.

Security Level

High danger

The overall level of security in a given country based on open data.

Crypto Salaries

Legally allowed

The legal status of cryptocurrency salaries to employers in a given country based on information from regulators, public data and feedback from our community.

Business Climate

Good

Overall assessment of the friendliness of this country for crypto-business. This indicator takes into account the cost of obtaining a license and the attitude towards crypto entities in the country.

Stablecoin Regulation

Low

This indicator is evaluating the regulation of stablecoins in a given country. Complex regulation means that it is possible to issue steiblcoins and obtain a license for this activity. Basic regulation means that the issuance of stablecoins is possible, but not all legal aspects are defined in the law. Standard regulation means that there is a legal practice of steylcoin circulation in a given country.

Bad Factors

This section describes the unfavorable economic factors for crypto-business in a given country. These are countries that are under sanctions or on the FATF grey list and other factors.

Types of licenses

Crypto-to-crypto

This license type allows VASP to provide legal exchange from one cryptocurrency to another.

Crypto-to-fiat

This type of license regulates the exchange from cryptocurrency to fiat.

Wallet/Custody

This country has a legal licensing procedure for companies that store cryptocurrency - - crypto wallet providers and custodians.

Good

Medium

Bad

intro

El Salvador is famous as the first country in the world, that has adopted Bitcoin as the legal tender. The President of El Salvador Nayib Bukele is the initiator of bitcoin legalization. Civil war in Salvador (1979-1992) hit local economy hard and it сompelled to change of local currency (colon) to US dollar. New president Nayib Bukele started in 2019 a new economic policy to attract investments in the country and make it popular as offshore zone. El Salvador's passport can now be bought with bitcoins. The country has investment programs that exempt investors from taxes.

Security level

El Salvador has a high danger security level according to our rating. Jurisdiction has 37.9 points (from 100) for safety level in Numbeo crime rating (1). Homicide level (2) is 18.2 per 100,000 inhabitants a year. Story of firearm-related death (3) 78.52 per 100,000 inhabitants a year.

Crypto Payments

Bitcoin is the legal tender in Salvador according to the Bitcoin Law (4).

Likewise, art. 7 says: "every economic agent must accept bitcoin as a form of payment when it is offered by someone who acquires a good or service".

Crypto Salaries

According to El Economista review (5), there is still a regulatory uncertainty for crypto salaries in Salvador. On the one hand, the labor code lets you pay wages in legal tender. On another hand Nayib Bukele claimed that paychecks should be delivered in national currency.

-Nayib Bukele responded with a tweet in which he mentioned that "salaries and pensions, by law, must be paid in dollars."
-The labor code establishes in its article 120 that: "The salary must be paid in legal tender." And the legal tender currencies in the country are the colon —although it is not in use—, the dollar and bitcoin, thanks to the Bitcoin Law.

-Likewise, article 7 of the Monetary Integration Law does not establish the obligation, but rather the possibility that dollars should be used to pay salaries, since it says: "Wages, salaries and fees may be denominated and paid in colones or dollars."

Quotes from EL Economista (auto-translation from Spanish)

Legal

The Bitcoin Law was approved (6) by a local parliament in August 2021. From this moment, El Salvador's history started as a place with friendly crypto regulations. The Bitcoin law gives Bitcoin a status of legal tender, equal to local currencies—colon and US dollar. It also describes licensing and taxation procedures for crypto entities. According to Zawya (7), “the new law paves the way for the acquisition of $1 billion in "crypto bonds" or "volcano bonds. “

The main regulator is CNAD - National Commission for Digital Assets. Two other regulators are the Central Reserve Bank and the Superintendency of the Financial System. CNAD website (8) provides a complete list of possible types of licensed entities in Salvador: Digital Wallets for Bitcoin, Bitcoin Custodians, Digital Exchanges, Payment Processors, DeFi, ICO, STO, and some others. Initially the law had only framework for entities operating with Bitcoin - "Bitcoin providers", but later in 2023 new DASP framework was extended by CNAD - Reglamento de Proveedores de Servicios de Activos Digitales.

By this, El Salvador had 2 different types of licenses for crypto activity: Bitcoin Providers (regulated by Central Bank) and DASP (regulated by CNAD). However, in October 2024, the Legislative Assembly of El Salvador united all these types of entities into 1 DASP framework. DASP list (9) now includes more than 50 entities and still is available on official website List of Bitcoin providers (10) with 150+ entities.

In the end of 2024 El Salvador Legislative Assembly adopted changes (11), which will make CNAD the main crypto regulator. It will supervise both types of licensed crypto entities: Bitcoin Providers and DASPs. In our opinion, Bitcoin Provider license will be canceled or placed in DASP status.

Taxation

Tax name	Index
PIT tax Max	30
PIT tax Min	10
Corporate tax (CIT)	30
Max Individual CGT (for crypto)	30
Min Individual CGT (for crypto)	0
Wealth tax Min	0
Wealth tax Max	0

El Salvador has a territorial taxation principle, which makes local income taxable. According to PWC, some types of foreign income, such as securities and financial operations, are still taxable for local citizens (12).

According to a government official, there is also no tax on crypto operations for foreigners in Salvador (13).

However, local citizens have a 10-30% PIT rate, 10-30% CGT rate, and 30% CIT rate. According to Deloitte Busines s (14), a lower CIT rate - 25%- is applied if annual income is lower than $150.000.

Also based on the Law for the Promotion of Innovation and Manufacture of Technology (15) approved in May 2023 includes:

Eliminating tariffs and taxes for 15 years. This will include the elimination of the income tax and any withholding on income tax, capital gains, municipal taxes on net company assets, customs duties, and transportation taxes, as well as the elimination of taxes on the importation of goods, inputs, machinery, equipment, and tools necessary for the new technology related investments.

Links

1)Crime Index by Country 2023 Mid-Year

2)List of countries by intentional homicide rate

3)List of countries by firearm-related death rate

4)El Salvador’s Bitcoin Law: Full English Text. Article

5)El Salvador: polémica por riesgo de pago de salarios en bitcóin. El Salvador: controversy over the risk of payment of salaries in bitcoin. Article

6)El Salvador Cryptocurrency / Digital Asset License. Article

7)El Salvador passed a law on cryptocurrency transfers. Article

8 and 9)Proveedores Registrados. Registered Providers
10) Banco Central De El Salvador Bitcoin Proveedores Registrados
11) GFI Changes to the Digital Assets Issuance Law in El Salvador

12)El Salvador. Overview. PWC

13)No tax on bitcoin profits for foreign investors: El Salvador after recognizing cryptocurrency

14)Deloitte busines s. PDF-file

15)Law for the Promotion of Innovation and Manufacture of Technology

Last update: November 2024

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intro

Security level

Crypto Payments

Bitcoin is the legal tender in Salvador according to the Bitcoin Law (4).

Likewise, art. 7 says: "every economic agent must accept bitcoin as a form of payment when it is offered by someone who acquires a good or service".

Crypto Salaries

Quotes from EL Economista (auto-translation from Spanish)

Legal

Taxation

Tax name	Index
PIT tax Max	30
PIT tax Min	10
Corporate tax (CIT)	30
Max Individual CGT (for crypto)	30
Min Individual CGT (for crypto)	0
Wealth tax Min	0
Wealth tax Max	0

According to a government official, there is also no tax on crypto operations for foreigners in Salvador (13).

However, local citizens have a 10-30% PIT rate, 10-30% CGT rate, and 30% CIT rate. According to Deloitte Busines s (14), a lower CIT rate - 25%- is applied if annual income is lower than $150.000.

Also based on the Law for the Promotion of Innovation and Manufacture of Technology (15) approved in May 2023 includes:

Links

1)Crime Index by Country 2023 Mid-Year

2)List of countries by intentional homicide rate

3)List of countries by firearm-related death rate

4)El Salvador’s Bitcoin Law: Full English Text. Article

5)El Salvador: polémica por riesgo de pago de salarios en bitcóin. El Salvador: controversy over the risk of payment of salaries in bitcoin. Article

6)El Salvador Cryptocurrency / Digital Asset License. Article

7)El Salvador passed a law on cryptocurrency transfers. Article

8 and 9)Proveedores Registrados. Registered Providers
10) Banco Central De El Salvador Bitcoin Proveedores Registrados
11) GFI Changes to the Digital Assets Issuance Law in El Salvador

12)El Salvador. Overview. PWC

13)No tax on bitcoin profits for foreign investors: El Salvador after recognizing cryptocurrency

14)Deloitte busines s. PDF-file

15)Law for the Promotion of Innovation and Manufacture of Technology

Last update: November 2024