Why El Salvador is one of the best jurisdictions for crypto projects
El Salvador is considered one of the most progressive jurisdictions in the world for conducting business in the cryptocurrency sector. The country has established an official legal framework for companies operating as cryptocurrency exchanges, virtual asset service providers (VASPs), and in related areas of digital finance.
Based on a presidential decree, two key types of licenses have been introduced:
- DASP (Digital Assets Service Provider) – for providers of services related to digital assets;
- BTCSP (BTC Service Provider) – for services related to Bitcoin.
These cryptocurrency licenses provide regulatory certainty, allowing businesses to grow legally and securely within the framework of current legislation. El Salvador positions itself as an international hub open to cryptocurrency and blockchain projects, including activities involving the trading of digital and virtual assets.
Regulation covers a broad range of crypto activities, making El Salvador a particularly attractive jurisdiction for entrepreneurs, investors, and cryptocurrency companies that value legal clarity and compliance with regulatory standards.
Advantages of regulation in El Salvador:
- opportunity for official registration and licensing;
- clear structure of regulatory provisions;
- high level of legal protection for market participants;
- transparent compliance mechanisms;
- government-level support for crypto initiatives.
Whether your cryptocurrency company is engaged in crypto asset exchange, fund custody, financial consulting, or digital asset trading – El Salvador offers the conditions for quickly determining the appropriate licensing model, completing registration, and complying with all regulatory specifications.
Types of activities under DASP and BTCSP licenses
In El Salvador, the DASP (Digital Asset Service Provider) cryptocurrency license grants cryptocurrency companies the official right to operate as virtual asset service providers. This crypto exchange license legally allows activities such as digital asset trading, crypto exchange operations, provision of custodial wallets, digital asset management, and even token issuance.
The BTCSP (Bitcoin Service Provider) license, unique to the Salvadoran jurisdiction, is designed for crypto companies operating exclusively in the BTC sphere. It provides legal clarity for businesses engaged in Bitcoin-related activities.
Both cryptocurrency licenses authorize the following types of activities:
- exchange and trading of cryptocurrencies;
- provision of digital wallets (including custodial solutions);
- management and custody of crypto assets;
- implementation of blockchain-based payment solutions;
- settlements and transfers in virtual assets;
- issuance of digital assets, including security tokens;
- financial consulting and corporate structuring;
- client onboarding in compliance with KYC/AML regulations;
- ensuring regulatory compliance and submitting regular reports;
- opening bank accounts and facilitating transactions.
Holding both crypto licenses, DASP and BTCSP, enables a cryptocurrency company to cover the entire spectrum of operations across the cryptocurrency value chain: from onboarding and regulatory compliance to trading and full-scale activity in the digital asset market.
Why El Salvador is a strategic choice for licensing
El Salvador offers a range of significant advantages for cryptocurrency companies considering obtaining licenses to operate in the digital asset space, whether it’s a cryptocurrency exchange license, DASP (Digital Asset Service Provider), or BTCSP (Bitcoin Service Provider).
One of the key factors that sets El Salvador apart from other jurisdictions is the presence of a clear and formalized legal framework specifically designed for virtual asset service providers and operations related to digital asset trading.
The country’s regulatory authorities maintain a supportive and constructive stance toward the crypto industry, creating a favorable environment for business.
Companies operating in this jurisdiction benefit from:
- transparent licensing procedures,
- legal certainty,
- a high level of regulatory support when conducting operations within the legal framework.
All of this makes El Salvador an attractive choice for crypto companies seeking legal and sustainable operations within the international regulatory landscape.
Advantages of El Salvador over other jurisdictions
| Feature | El Salvador | Other popular jurisdictions |
| Legal status of BTC | Legal tender | Not legal tender |
| Types of licenses | DASP, BTCSP | Mostly VASP or generic financial licenses |
| Crypto taxation | Favorable, no capital gains tax on BTC | Varies, often strict |
| Licensing speed | Fast (2–4 months) | Often 6+ months |
| Regulatory support | High | Moderate |
| Scope of services | Exchange, wallet, asset management, token issuance | Limited |
| Compliance & reporting | Clear, with regular guidance | Often ambiguous |
| Market access | Global, unrestricted | Sometimes restricted |
Key advantages for cryptocurrency companies
El Salvador offers a number of significant advantages for crypto companies, making the jurisdiction especially attractive for launching and developing businesses related to digital assets.
Among the main advantages:
- Legal certainty in all forms of activity related to cryptocurrencies and virtual asset services;
- Favorable tax regime, especially regarding BTC and other digital assets;
- Active government involvement in promoting innovation and attracting investment in the blockchain and fintech sector;
- Lower compliance burden when obtaining a cryptocurrency exchange license compared to other jurisdictions;
- Access to a growing market of clients and investors interested in virtual asset services;
- Transparent procedure for registration, regulatory compliance, and ongoing supervision.
Companies register in El Salvador also gain the opportunity to establish direct interaction with regulators and benefit from an expedited application and review process.
Flexibility in choosing the type of activity, whether it is an exchange platform, custodial service, or digital asset provider, combined with El Salvador’s international recognition as a crypto-friendly zone, gives businesses a significant strategic advantage.
Prifinance plays a key role in supporting cryptocurrency projects aiming to enter the Salvadoran market. With a deep understanding of local legislation and many years of experience in international licensing, the Prifinance team provides a full range of legal and consulting services: from selecting the appropriate cryptocurrency license (DASP or BTCSP) and preparing all documentation to interaction with regulators and support throughout the registration process.
The company’s specialists ensure transparency, legality, and full regulatory compliance, allowing clients to focus on growing their business in one of the world’s most progressive crypto jurisdictions.
How El Salvador differs from other countries in licensing matters
El Salvador’s approach to regulating cryptocurrency activities stands out from the practices of most other countries due to its openness and clearly structured licensing system.
In many jurisdictions, potential VASPs (Virtual Asset Service Providers) and crypto exchanges find it difficult to determine which regulatory requirements they must comply with. In some countries, the regulations are excessively strict and restrictive; in others, there is a lack of legal clarity.
El Salvador, in contrast, offers a transparent, predictable, and formalized legal procedure for obtaining a crypto license to exchange cryptocurrencies and conduct any activities related to cryptocurrencies and digital assets. This makes the country attractive to crypto companies seeking a lawful and sustainable presence in the global cryptocurrency market.
| Country | Type of crypto license | Cryptocurrency taxation | Licensing requirements | Market environment |
| El Salvador | DASP, BTCSP | No capital gains tax for BTC | Clear, supportive | Open, innovative |
| Estonia | VASP | Standard capital gains tax | Stricter, frequently changing | Regulated, stable |
| Lithuania | VASP | Standard capital gains tax | Moderate, transparent | Growing, EU zone |
| Singapore | Major Payment Institution, VASP | Yes, but business-friendly terms | Strong AML focus, regulatory compliance | Advanced, global |
| UAE | VARA, ADGM | No corporate tax until 2023 | Complex, multi-tiered | High capital, global |
| USA | MSB, State licenses | Capital gains tax applies | High compliance requirements, costly | Competitive, large |
El Salvador’s legal environment is characterized by a clear structure and a strong focus on business support, making the jurisdiction particularly attractive for entrepreneurs and crypto companies seeking a fast and reliable launch of a crypto exchange, wallet service, or digital asset management platform.
The emphasis on streamlined procedures, transparent regulatory guidelines, and the government’s openness to dialogue with the crypto industry creates conditions in which licensing and launching crypto projects become realistic and manageable tasks, even within tight timeframes.
Requirements for obtaining a cryptocurrency exchange license in El Salvador
To obtain a DASP (Digital Assets Service Provider) or BTCSP (BTC Service Provider) crypto exchange license in El Salvador, cryptocurrency companies must comply with the regulatory standards set forth in local legislation.
The government of El Salvador has developed a specialized regulatory framework governing activities in the digital asset sector. This framework includes a comprehensive set of compliance rules and documentation requirements that apply to both first- and second-tier service providers, depending on the nature of their operations.
Regulation covers the following areas:
- operation of cryptocurrency exchanges,
- provision of wallet services (including custodial services),
- digital asset trading services,
- digital asset management.
The established norms provide companies with a clear understanding of their compliance obligations and operational standards, significantly simplifying the process of obtaining a cryptocurrency exchange license and conducting business within the legal framework.
| Requirement | Description |
| Company registration | Local legal entity, confirmation of business register in El Salvador |
| Capital requirements | Minimum capital depends on scope of services (varies for DASP/BTCSP) |
| Directors and founders | At least one certified director; comprehensive background checks on founders |
| Compliance officer | Appointment of an AML/compliance officer |
| KYC/AML policy | Comprehensive KYC (Know Your Customer) and AML policy |
| Legal documents | Company charter, operating agreement, share capital structure |
| Application | Submission of a detailed application with supporting documents |
| Business plan | Detailed business model and risk assessment |
| Security measures | Implementation of digital security, data protection, and wallet controls |
| Fee payment | Payment of licensing and register fees |
| Ongoing reporting | Compliance with regulatory authority’s reporting standards |
Companies applying for a DASP (Digital Assets Service Provider) or BTCSP (BTC Service Provider) crypto license in El Salvador are required to meet a number of formal and regulatory standards established by local legislation. Below are the key requirements:
- Company registration
The applicant must register a legal entity in El Salvador and provide confirmation of compliance with all legal and regulatory requirements applicable to its status. - Capital requirements
A minimum share capital must be secured. The exact amount depends on the type of crypto exchange license (DASP or BTCSP), as well as the scale and nature of the proposed activities. - Compliance and Anti-Money Laundering (AML)
A crypto company is required to appoint a Compliance Officer and to develop and implement internal AML/KYC policies and procedures (anti-money laundering and customer identification). - Application and supporting documentation
The crypto license application must be accompanied by a comprehensive set of documents, including a business plan, financial statements, security protocols, legal documentation, and other supporting materials. - Security and risk management
The company must implement internal policies for protecting digital assets and client funds, ensuring the security of wallets and transactions involving virtual assets. - Ongoing compliance and reporting
Companies are obligated to regularly submit reports to the regulatory authority, including audited financial statements and updates reflecting the current status and nature of business operations.
These provisions form the foundation for lawful and sustainable operations of cryptocurrency companies in El Salvador, ensuring transparency, user protection, and alignment with international standards.
Registering a crypto company in El Salvador: Stages and timeline
The licensing procedure in El Salvador for obtaining DASP (Digital Assets Service Provider) and BTCSP (BTC Service Provider) crypto licenses is based on the principles of transparency and accessibility. It is designed to enable companies to enter the cryptocurrency and virtual asset market as quickly and efficiently as possible.
The process includes the following key stages:
- Company formation and preparation
Establishing a local legal entity, appointing directors, opening a bank account, and preparing the initial set of legal documents. - Compliance structure setup and application submission
Developing internal compliance procedures (including AML/KYC), gathering all required documentation, and submitting the application to the competent authority. - Regulatory review of the application
The regulator reviews the submitted materials and may request additional documents or clarifications if necessary. - Decision and license issuance
Upon approval, the license and registration fees are paid, after which the cryptocurrency license is officially issued. - Ongoing regulatory compliance
The company must continuously meet reporting obligations, including submitting audited financial statements and operational reports to the regulator.
Estimated timeframes for completing all stages range from 2 to 4 months, depending on the company’s readiness and the completeness of the submitted documentation.
This structure allows the applicant not only to efficiently go through the licensing process but also to establish a legal business model in one of the most favorable crypto jurisdictions.
Prifinance provides full support throughout the process of obtaining DASP and BTCSP cryptocurrency licenses in El Salvador, from company register and document preparation to application submission and interaction with the regulator.
The specialists handle the development of compliance procedures (AML/KYC), assistance with account opening, and ongoing regulatory compliance. Thanks to Prifinance’s experience, clients go through the licensing process faster and without errors.
Taxation of crypto companies in El Salvador
El Salvador’s tax system for the cryptocurrency sector is considered one of the most progressive and business-oriented in the world. The jurisdiction aims to promote the adoption of digital assets and attract Virtual Asset Service Providers (VASPs) by offering a transparent and straightforward tax model.
For companies that have obtained DASP (Digital Asset Service Provider) and BTCSP (Bitcoin Service Provider) licenses, understanding tax, accounting, and compliance principles is crucial for sustainable operation in the digital asset market.
Key tax provisions for crypto companies in El Salvador:
- No capital gains tax on BTC
El Salvador offers a unique exemption from capital gains tax for transactions involving Bitcoin and certain other digital assets. This creates a significant tax advantage for both businesses and individual investors. - Corporate tax
The general corporate tax rate is 30%. However, deductions for operational expenses (such as business costs, legal services, audits, compliance, etc.) are allowed, enabling optimization of the taxable base. - No VAT on cryptocurrency transactions
The sale and exchange of cryptocurrencies and digital assets are not subject to VAT. This allows companies to establish more flexible pricing policies and maximize cash flow without additional tax burdens. - Tax and financial reporting obligations
All licensed crypto companies are required to submit annual financial statements, audit reports, and certified accounting documents to the tax authority and the regulator. There must also be a clear separation between client funds and the company’s own assets. - Banking and capital flow
Companies can open multi-currency bank accounts and freely move capital within and outside of El Salvador, without restrictions related to currency controls. - Double taxation avoidance agreements
El Salvador has entered into international agreements to avoid double taxation. This is especially important for companies operating in multiple jurisdictions and conducting cross-border transactions.
Practical recommendations for tax and compliance:
- Engage experienced tax advisors to ensure compliance with local regulations.
- Maintain thorough records of all cash flows, crypto asset transactions, and deductible expenses.
- Implement internal controls, conduct timely audits, and keep accounting records up to date.
- Submit tax and regulatory reports accurately and on time to avoid penalties and the risk of losing certification.
A comprehensive approach to taxation and regulatory compliance is key to the successful and legal operation of crypto companies in El Salvador.
| Tax element | Details |
| Corporate tax rate | 30% (deductions allowed for compliance, legal, and operational expenses) |
| Capital gains tax | 0% on Bitcoin and digital assets |
| VAT on cryptocurrency | 0% |
| Tax reporting | Annually, with mandatory audit and financial statements |
| Double taxation agreements | Yes |
| Banking and capital movement | Free movement of funds, multi-currency accounts |
| Fund separation (clients vs. company) | Mandatory (client funds vs. company capital) |
| Regulatory authority | National Tax Authority, Financial Regulator |
El Salvador’s tax regime enables cryptocurrency businesses to operate efficiently by providing legal certainty, unrestricted capital flow, and attractive conditions for both local and international investors. Compliance with regulatory and tax requirements is crucial for maintaining licensed status and a strong reputation in this virtual asset zone.
Quick facts about obtaining a crypto license in El Salvador
Below are key facts regarding the process of obtaining a crypto license in El Salvador. The table highlights the main legal, regulatory, and tax aspects that companies should consider when applying for a DASP or BTCSP license. This information provides a quick overview of the jurisdiction’s advantages and applicant requirements:
| Category | Quick fact |
| Available licenses | DASP (Digital Asset Service Provider) and BTCSP (Bitcoin Service Provider) |
| Minimum requirements | Local company registration, business plan, compliance procedures |
| License issuance time | 2–4 months (depending on document readiness) |
| Company registration | Legal entity registration in El Salvador is mandatory |
| Capital requirements | Determined by license type and business scale |
| Compliance & AML/KYC | Appointment of officer, implementation of AML/KYC policies |
| Regulator | Government regulatory authority (crypto-friendly) |
| BTC taxation | No capital gains tax on BTC |
| Corporate tax | 30%, with deductions allowed for operational expenses |
| VAT on crypto operations | Sale and exchange of crypto are VAT-exempt |
| Banking services | Multi-currency accounts, free movement of capital |
| Reporting | Annual financial reports, audit, segregation of client and company funds |
| International agreements | Double taxation treaties with several countries |
| Support from Prifinance | Full support: from company setup to license acquisition and reporting guidance |
Turnkey professional support
Our team consists of experienced lawyers and international consultants specializing in the licensing and legal support of crypto projects. We have in-depth expertise in global regulatory frameworks, including DASP and BTCSP licenses, and take an individualized approach to each client.
We provide end-to-end support, from company registration and document preparation to regulatory interaction and compliance oversight. Our approach is built on professionalism, precision, and efficiency, enabling our clients to confidently launch and grow their crypto businesses in any jurisdiction.
Nikolai Timofejev Expert with 15 years of experience in FinTech, payments, and business strategy.
Oleksii Kindratenko Expert in company registration, financial licenses, AML and tax consulting.
Eugeniu Bevziuc International business consultant with experience in company setup, remote work, and multilingual communication.
Launch your crypto project in El Salvador with expert support
Full-service assistance – from company registration to crypto license acquisition.
FAQ – 10 frequently asked questions
To conclude this guide, here are answers to the 10 most common questions asked by crypto project founders, investors, consultants, and company directors about obtaining and maintaining DASP and BTCSP licenses in El Salvador. These key points cover regulatory requirements, compliance, and the specifics of operating in this jurisdiction.
- What crypto licenses are available in El Salvador?
El Salvador offers two types of crypto licenses:- DASP (Digital Asset Service Provider)
- BTCSP (Bitcoin Service Provider) – Both licenses allow companies to operate as crypto exchanges, wallet providers, digital asset trading platforms, and related service providers.
- What activities are covered by DASP/BTCSP licenses?
Licensed crypto companies can legally engage in:- cryptocurrency trading
- exchange operations
- custodial and wallet services
- digital asset issuance
- digital asset-based payments
- client onboarding
The full scope of activities is defined in the submitted application and reflected in ongoing regulatory reporting.
- What are the main legal and compliance requirements?
Key requirements include:- local company registration in El Salvador
- minimum share capital from USD 1,000 to 2,500 (depending on license type)
- implementation of AML/KYC policies
- appointment of a Compliance Officer
- certification of company documents
- annual audit and regular reporting to the regulator
- What is the process and timeline for obtaining a cryptocurrency license?
The process includes company registration, preparation and submission of documents, regulatory review, fee payment, and license issuance. Estimated timeline: 2–4 months, depending on company readiness and compliance. - What financial conditions must be met to operate?
Capital requirements depend on the license type and scope of business. Funds must be deposited in a local bank. Segregation of client funds from company capital is required to comply with regulatory standards. - What taxation applies to crypto companies?
- 0% capital gains tax on BTC and certain digital assets
- 30% corporate tax, with deductions allowed for business and compliance expenses – Companies must file annual tax returns, financial statements, and audit reports.
- Can a foreign company or investor apply?
Yes. Foreign ownership and investment are allowed. Directors, shareholders, and beneficiaries must meet compliance certification standards. - Who is the main regulator, and what documents are required?
Oversight is provided by the national financial regulator and the tax authority. Required documentation includes a full set of legal, financial, and compliance materials based on the license type. - What happens in case of non-compliance?
Failure to meet legal, financial, or reporting obligations may result in license suspension, fines, or removal from the official registry. Ongoing compliance is mandatory for maintaining licensed status. - What are the advantages of licensing in El Salvador compared to other jurisdictions?
Key benefits include:- transparent legal framework
- favorable tax regime
- fast-track licensing process
- low entry barriers
- tech-forward regulation
- government support
- global recognition as a crypto-friendly jurisdiction
