By integrating Bitcoin as an official currency in the country, El Salvador became a pioneer in June 2021, which was a big leap in the adoption of digital currency. For entrepreneurs, tax incentives and exemptions are offered for companies with an El Salvador crypto license. These entities now enjoy freedom from various fees, including on profits and income from virtual assets.
Continuing the topic, it is worth noting that El Salvador promotes the use of crypto assets by allowing the payment of official fees in digital currency. Everything is done to create the most favorable investment climate, making obtaining cryptocurrency license in El Salvador relatively simple. The government supports business policies that attract investors.
Evolution of El Salvador Regulation
June 9, 2021, was a turning point because there was no full-fledged cryptocurrency regulation system before that, but they were used for private transfers.
The country has made a big step towards developing the fintech industry by becoming the first to recognize Bitcoin as legal tender.
On September 7, 2021, a law came into force that provides for the acceptance of Bitcoin by companies to pay payments and taxes. In addition, El Salvador has deployed 200 Bitcoin ATMs, the Chivo wallet app, and $30 in incentives to citizens.
Digital Assets Bill (2022): Aimed to establish a clear legislative framework for digital asset ownership transfers.
The Digital Assets Law (Ley de Emisión de Activos Digitales), released on November 17, 2022, established rules for digital asset providers, aligning them with the standards of financial institutions.
The Financial System Authority (SSF) enforces compliance, focusing on AML/KYC adherence, financial reporting, asset protection, and transaction security. Obtaining a crypto license El Salvador is part of these comprehensive regulations.
Advantages and Opportunities
Leading Position
If you take advantage of the legal framework of El Salvador right now, you can firmly secure a strong position in the Latin American crypto market, which is now one of the most developed.
Legal guarantees
An opportunity to strengthen your credibility by ensuring compliance with AML and KYC standards and navigating the cryptocurrency landscape.
Tax Incentives
The country provides investors with comprehensive tax benefits for digital asset transactions, including capital gains and related cryptocurrency activities.
Market entry
The ability to work with a wide range of cryptocurrencies and consumers who value innovative financial solutions. Thus, enter the crypto market.
Partnership with the Government
El Salvador’s stance is proactive, which means open doors for joint projects in digital payments and blockchain innovations.
Regional Expansion
Strengthen your local and international ties by taking advantage of El Salvador’s opportunities to expand into Central and South American markets.
Acquiring Cryptocurrency Licenses in El Salvador and DMCC (UAE)
Speaking about El Salvador, we can say for sure that obtaining a crypto exchange license El Salvador here is a process that consists of legal, operational, and financial checks. The first step is registering a legal entity, followed by a business plan and confirmation of the reliability of the organizational structure. At the same time, it is essential to strictly adhere to strict asset management standards, remembering financial transparency and protecting the rights of users and investors. Of course, it is necessary to understand the strict protocols for detecting financial crimes following AML and KYC regulations.
The DMCC free zone in the UAE requires careful submission of personal and business documentation. You must prove operational readiness and demonstrate the financial stability of your company, including KYC and AML compliance. All this is necessary to create a secure virtual asset landscape. Therefore, it is necessary to strictly comply with legal requirements, which may require expert advice.
Essential Criteria
- Detail the company’s organizational framework, specifying roles and responsibilities for clear, efficient operations.
- Adhere to robust standards for digital asset storage and management.
- Incorporate as a legal entity in El Salvador and register with the National Commission of Digital Assets.
- Maintain a minimum of two shareholders.
- Present identification and residency proofs for all board members and shareholders.
- Submit a comprehensive business plan highlighting digital service capabilities.
- Keep meticulous financial records and openly disclose operational and ownership details.
- Establish stringent measures for identifying and reporting financial crimes, aligning with AML/KYC standards.
- Align with all user and investor protection laws, including risk disclosures and refund procedures.
- Engage actively with authorities, ensuring full compliance and timely reporting.
Crypto License Acquisition Process
Initial Documentation Collection
- Draft a concise business model (1-2 pages).
- Choose a company name.
- Confirm the residential addresses of directors and shareholders (utility bill).
- Secure a notarized and apostilled power of attorney.
- Provide notarized and apostilled passport copies for all shareholders (minimum of 2) and directors.
Registration and Licensing Phase
- Register the company.
- Prepare corporate and El Salvador cryptocurrency license application documents.
- File the El Salvador cryptolicense application with the National Commission for Digital Assets (NCDA).
Corporate Account Setup
- Analyze and compare suitable Banks/EMIs based on AML policies and client risk profiles.
- Collect necessary documents (funds flow, source of wealth, account purpose, key partners, company website, utility bill, etc.).
Crypto Company Formation in El Salvador
- Organizational Structure Decision
Opt for an appropriate company structure, commonly a limited liability company in El Salvador. Seek guidance from experts for tailored advice.
- Company Naming
Choose and reserve a company name through El Salvador’s Commercial Registry.
- Document Preparation
Prepare and notarize essential documents, including director passports and address proofs, consulting with lawyers for a comprehensive document checklist.
- Company Registration Application
Submit the notarized documents for company registration to the Commercial Registry, awaiting official approval and certificate issuance.
- Corporate Account Opening
Concurrently open a corporate bank account, meeting the minimum share capital requirement. We can facilitate remote or representative-assisted account openings.
- Additional Public Authority Registration
Post-registration, register with Hacienda (tax authority), Salvadoran Social Security Institute, and Ministry of Labor. Secure the Número de Registro del Contribuyente (RNC) and Número de Identificación Tributaria (NIT) from the Ministry of Finance within 15 days.
- Acquire Crypto Exchange License in El Salvador
Register with the Central Reserve Bank’s Registry of BTC service providers for BTC services, adhering to SSF and FIU regulations for financial crime prevention. For broader digital asset services, ensure registration with the National Commission on Digital Assets’ RPSAD, as mandated by the Digital Asset Issuance Act.
Tax Benefits
Companies receive significant tax benefits if they hold a cryptocurrency license in El Salvador and are registered with the Registry of Digital Asset Service Providers (RPSAD).
- First and foremost, it is freedom from a wide range of fees, taxes, and duties on the valuation and yield of digital assets.
- RPSAD-registered companies are also exempt from the obligation to withhold these taxes where applicable.
- Exemption from taxes related to capital gains and regular income from transactions with digital assets.
- Benefit from comprehensive protection from various taxes. These include transfer tax and income tax for issuers of digital assets, certifiers, and service providers.
FAQ
How long does obtaining a Crypto license in El Salvador usually take?
Provided that all the required information is provided in the application, it will take approximately 20 business days. If it is incomplete, then a few days will be given to fill in what is missing.
How much will the license process cost?
Among the financial conditions, a state fee of $5,475 (for initial registration) and a state fee for renewal – $3,650 per year is worth considering. There is also an additional certification that can be paid in both fiat and bitcoin equivalent in the amount of $50.
Why did El Salvador decide to make Bitcoin the official means of payment?
This decision was made because the country does not have its currency, where the US dollar is used for all payments. After the adoption of Bitcoin, it became easier for businesses and individuals to make money transfers. This has had a particularly positive impact on those working abroad. There are now many more opportunities to develop the country’s economy.
What are the most important things to consider when obtaining a crypto license in El Salvador?
To begin with, you need to have at least two partners with a legal representative’s passport. Everything has to be notarized or legalized by the El Salvadoran consulate. Having a local director or agent will make it easier to obtain a crypto exchange license in El Salvador.
