El Salvador, a global crypto pioneer since adopting Bitcoin as a legal tender, offers streamlined processes for obtaining a crypto license.
Whether you’re launching an exchange, wallet, or blockchain service, understanding local regulations is key to operating legally and avoiding penalties, reputational damage, operational shutdowns and missed opportunities.
This guide breaks down steps, fees, and timelines to secure your crypto license in El Salvador and tap into Central America's booming digital economy.
Overview of The Crypto Market in El Salvador
Here's what you need to know about the circumstances of the crypto market in El Salvador.
The current state of the crypto adoption in El Salvador
Since declaring Bitcoin legal tender in 2021, El Salvador showed mixed adoption. While the government-backed Chivo Wallet reports 4 million users, technical challenges and public skepticism remain barriers to daily use – the USD dominates.
Bitcoin’s price swings and infrastructure gaps hold back its everyday use. However, regulatory changes in 2023, such as the Digital Assets Issuance Law (LEAD), have increased investor confidence, driving interest in crypto tourism and blockchain-based remittance solutions.
Over 20 licensed entities work under the National Commission of Digital Assets (CNAD), showing growing institutional trust despite slower public adoption and global market uncertainties.
Government initiatives to promote cryptocurrency adoption
El Salvador's government actively promotes crypto integration. Key projects include Bitcoin City, a tax-free zone powered by geothermal energy, and the $1 billion Bitcoin Bond (delayed but pending regulatory clarity).
Tax incentives exempt foreign investors from capital gains on Bitcoin, while the 2023 Digital Assets Issuance Law (LEAD) streamlines crypto-business registration. Partnerships with firms like Bitfinex and Strike improve payment infrastructure.
Bitcoin mining uses volcanic energy, aligning with sustainability goals. These initiatives strive to position El Salvador as a blockchain innovation leader.
Why establish a crypto business in El Salvador
Businesses benefit from zero capital gains tax, dollarization (mitigating local currency risk), and preferential regulatory treatment.
The government's support for El Salvador crypto companies opens up access to Central American markets and remittance channels worth about $7 billion each year.
Early entrants gain first-mover benefits in crypto tourism, fintech, and blockchain-based land registries, backed by a growing tech talent ecosystem and international partnerships.
Market opportunities and growth areas
Remittances (20%-24% of GDP) present a prime opportunity for blockchain solutions to reduce costs and delays.
Bitcoin mining, leveraging renewable volcanic energy, appeals to ESG-focused investors.
Emerging sectors include tokenized real estate, decentralized finance (DeFi) platforms, and digital identity systems. Tourism tied to Bitcoin-friendly services (e.g., crypto-accepting hotels) is expanding.
With 70% unbanked citizens, digital wallets and microfinance services hold untapped potential, positioning El Salvador as a testing ground for inclusive crypto economies.
Key Regulations for Crypto Companies in El Salvador
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Here are the key regulations for getting a crypto license in El Salvador.
El Salvador's Bitcoin Law and its implications
In 2021, El Salvador made Bitcoin a legal currency. Businesses have to accept it for payments unless there are technical issues. The law also removed the capital gains tax on Bitcoin exchanges.
To help people use Bitcoin, the government promised to offer training and tools, including a digital wallet called Chivo. While using Bitcoin isn't compulsory, the country has been operating under this system for four years, leading to increased cryptocurrency use.
The law also requires crypto businesses to get valid licenses and follow the rules to avoid legal problems.
Digital Assets Issuance Act
In 2023, El Salvador rolled out the Ley de Emisión de Activos Digitales (LEAD), also known as the Digital Assets Issuance Act.
It created a solid framework for various digital assets, not just cryptocurrencies. It is an improvement over the previous Bitcoin Law, which wasn't so detailed.
The LEAD introduced the National Commission of Digital Assets (CNAD), a central regulatory body responsible for licensing, oversight, and enforcement of digital asset regulations.
It also expanded tax benefits for digital asset service providers, making El Salvador one of the most tax-friendly jurisdictions for crypto-related activities.
Anti-Money Laundering (AML) requirements
LEAD also introduced AML requirements for crypto asset providers in El Salvador to match international standards set by the Financial Action Task Force (FATF).
After LEAD amendments in late 2024, El Salvador VASPs must implement proper AML policies, monitor transactions, and report suspicious activities to CNAD.
The Financial Investigation Unit (UIF) plays a key role in investigating suspicious activities by following up on reports from service providers or conducting its own checks.
Know Your Customer (KYC) policies
LEAD and its updates have made the rules for Know Your Customer (KYC) more challenging for crypto businesses. Now, these companies must keep accurate records of all money transactions and ensure customers go through a solid identity check.
Additionally, higher-risk transactions, such as those involving the source of funds, may require further scrutiny. These standards improve transparency and compliance within the digital asset sector.
El Salvador vs other jurisdictions
El Salvador is taking the lead in crypto regulations by making it easy to get licenses, keeping costs low, and building a blockchain community. However, it still needs to improve its reputation to match other jurisdictions.
El Salvador is trying to increase its credibility through stricter KYC/AML/CTF requirements but still lags established offshore tax havens like the British Virgin Islands and the Cayman Islands, which offer better access to financial institutions and a more favorable reputation.
On the other hand, Dubai and the UAE are becoming hot spots for tech, drawing in businesses, especially from the UK, because of their dynamic markets.
Over in the European Union, despite higher costs and strict compliance under MiCA regulation, countries like Lithuania, Poland, and France provide viable alternatives for getting VASP licenses.
These regions offer distinct advantages, making them competitive choices alongside El Salvador's crypto-friendly environment.
Further reading: How to choose a crypto-friendly country.
Types of Crypto License in El Salvador
El Salvador crypto license has two primary types:
- Bitcoin Service Provider (BSP) license for companies dealing exclusively with Bitcoin, such as payment processing, custodial or non-custodial wallets, and exchanges.
- Digital Asset Service Provider (DASP) license for businesses handling other cryptocurrencies or digital assets, including non-Bitcoin exchanges, wallets, token issuance, NFTs, and investment services.
The National Commission of Digital Assets (CNAD) issues both licenses and requires meeting specific regulatory criteria to operate legally in El Salvador’s crypto ecosystem.
How to get a crypto license in El Salvador
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Here are the steps you need to go through to get a crypto license in El Salvador.
Register your company
To start a business in El Salvador, you must register a legal entity with the commercial registry. A limited liability company (SRL) is a good choice because it offers flexibility.
You need at least two shareholders. The good news is that you don’t need a physical office in El Salvador, so a virtual office can work well for foreigners.
Prepare documents for application
The documents you need to prepare for company registration include notarized and apostilled passports for all directors and shareholders, proof of residence and an in-depth business plan showing your future activities.
You’ll also need notarized power of attorney documentation.
While the shareholders and directors don’t need to be El Salvador residents, you’ll need to appoint one representative or have a local legal agent who will contact the regulatory authorities.
Align with AML/KYC policies
El Salvador requires cryptocurrency companies to set up anti-money laundering (AML) and know your customer (KYC) policies aligned with FATF Recommendations, including the "Travel Rule" for transactional transparency and El Salvador's Digital Assets Issuance Law.
Key procedures must include:
- Customer Due Diligence (CDD) to verify identities and perform Enhanced Due Diligence (EDD) for high-risk clients.
- Real-time transaction monitoring to flag unusual activity, suspicious patterns or anomalies.
- Reporting protocols to submit suspicious activity reports to the NCDA within 24 hours of detection and keep records for at least five years.
- Security measures to ensure digital asset platform integrity through encryption, audits, and incident response plans.
Companies operating in high-risk sectors, like crypto exchanges, custodial services, or remittance platforms, need to have a local Money Laundering Reporting Officer (MLRO) based in El Salvador. This person will be responsible for reporting directly to CNAD.
For lower-risk sectors, like non-custodial services, P2P trading platforms and NFT marketplaces, having a non-resident Money Laundering Reporting Officer (MLRO) can work fine as long as there’s a local legal representative on board.
This setup means you can bring in outside expertise, but there’s still someone local in El Salvador to manage interactions with the regulators.
Meet capital requirements and provide proof of funds
The minimum authorized capital for digital asset service providers in El Salvador is $2000; you must deposit 5% of that upon registration.
That makes El Salvador one of the most affordable crypto destinations, at least in terms of share capital requirements.
Submit your application
El Salvador NCDA issues digital assets licenses, so you need to submit your application to them.
Make sure you have covered all the documentation, as NCDA may ask for clarification or reject the application for inappropriate documentation.
Track your progress toward approval
Registering a company and getting a digital assets business license takes 3-6 months but can sometimes be shorter.
It all depends on the completeness of the application and the size and complexity of the business you want to operate.
However, El Salvador’s licensing is very crypto-friendly in terms of time and costs.
Setting up your crypto business operations
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Here are a few operational tips when opening a business in El Salvador.
Banking relationships in El Salvador
Considering El Salvador’s unbanked population, you can’t expect a developed banking system. However, you will still need a local corporate bank account and going through further due diligence and compliance procedures.
Also, most banks aren’t too happy with digital asset service providers due to financial crimes, making opening a corporate account challenging.
That’s why working with local legal experts is beneficial, as they can navigate the process better.
Staffing and local employment considerations
You don’t need to employ local staff apart from a legal representative and compliance officer, who need to be El Salvador residents.
However, you should look into hiring local staff primarily due to the language difficulties you may encounter if only foreigners who don’t speak Spanish work in your company.
Technology infrastructure needs
Even though there are no strict technical and cybersecurity regulations in El Salvador, it’s leaning towards FATF standards.
We expect new rules to raise the bar soon, so try to future-proof your company by choosing a secure and stable infrastructure.
Business continuity planning
You must submit a detailed business plan when applying for a license, so make sure business continuity is part of it.
Try to predict some common (unpleasant) scenarios that follow the digital assets industry, such as outages and cyber attacks, and how exposed you are to those risks.
Also, make contingency plans for those scenarios and find ways to overcome those situations to protect your clients and customers.
Tax benefits and incentives for crypto companies
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El Salvador digital assets companies and various Bitcoin-related services can expect tax benefits in this jurisdiction.
Tax structure for crypto businesses
LEAD offers some exemptions from corporate income tax, services transfer tax and municipal taxes.
You can expect to get exemptions from import duties, and you won’t pay income tax for income generated outside the country.
However, your earnings in El Salvador are subject to their tax rules.
Foreign investment incentives
Foreign investors are welcome in El Salvador, and you can benefit from tax incentives. Plus, if you earn money outside of El Salvador, you won't have to pay income tax, which is a great advantage.
Zero capital gains tax on Bitcoin
El Salvador’s Bitcoin law recognizes zero capital gains tax on Bitcoin. Their upcoming Bitcoin City will be a tax haven with no taxes on income, property, purchasing, or emissions.
Tax reporting requirements
Even if you qualify for some tax exemptions, you must keep clear and accurate records and report everything to the CNAD and the Ministry of Finance.
You must also prepare annual financial statements, declare VAT and fulfil AML/KYC-related obligations.
Common challenges and how to overcome them
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Here are some difficulties you may encounter while getting a crypto license in El Salvador.
Language barriers
If you don't speak Spanish, the official language of El Salvador, you'll encounter many issues in everyday activities. That's why working with local experts or hiring local staff is important.
Cultural business differences
You may need time to adapt if you are from a Western background.
Central Americans value personal conversations, meaning business meetings can start with extended small talk or socializing. This approach can seem slow.
Also, the perception of time is different. Meetings might start later than scheduled, and decision-making processes can take longer.
On the other hand, people respect hierarchy. Being overly casual—especially when addressing senior figures—can be perceived as unprofessional or disrespectful.
Establishing banking relationships
Even though the government is trying hard to support blockchain and technology industries, local banks are still cautious about partnering with companies that provide digital asset services.
Building a relationship with local banks can be challenging, so it's smarter to team up with local experts who already have good connections and a solid grasp of the banking system.
Regulatory uncertainty areas
The recent changes we discussed regarding BTC's status as an official digital currency surprised everyone. However, even without that, crypto regulations are still relatively new and rapidly changing worldwide.
You can expect more regulatory and compliance pressure, so it's best to be proactive and future-proof your company rather than meeting minimal standards.
How to get crypto license in El Salvador with Legal Nodes
At Legal Nodes, we make getting the right licenses for your crypto business simple and straightforward. We provide customized support from the start to the finish of the process.
First, we look at your business model, target markets, and long-term goals to find the best jurisdictions that suit your plans.
With our knowledge of over 20 different regulatory environments, we help you understand the timelines, costs, and requirements involved, whether you’re looking for quick registrations or fully regulated frameworks.
Our curated network of vetted legal professionals and regional specialists ensures compliance with AML/CFT standards, KYC protocols, and other jurisdictional regulations.
By collaborating directly with these experts, we provide transparent pricing—no hidden fees—while minimizing risks and accelerating timelines.
We take care of tasks like:
- Drafting legal documents
- Communicating with regulators
- Building compliance systems
- Finding staffing solutions
- Meeting capital reserve needs
- Setting up physical offices
We also help you create tax-efficient structures that protect your profits and lower your costs. Our support doesn’t stop once you’re licensed. As regulations change, we provide updates and advice to help you adapt and grow your business with confidence.
Legal Nodes is here to help you choose the right jurisdiction and stay compliant, so you can focus on growing your crypto venture.
Conclusion about crypto license in El Salvador
El Salvador was the first to adopt Bitcoin as a regular currency and continues to support crypto businesses with low costs, great taxing and crypto-friendly regulations.
While language barrier and crypto uncertainty can be downsides, this Central American country has some unique benefits and is worth considering for your crypto company.
Legal Nodes will help you get a crypto license in El Salvador and stay compliant with key regulations. We’ll provide you with continuous legal support throughout your business journey so you can focus on your operations without worrying about legal issues.
FAQs about crypto licensing in El Salvador
How much is a crypto license in El Salvador?
You’ll pay the initial registration fee of $5,475 and a renewal fee of $3,650. You’ll also incur costs for business registration, translation of the documents, virtual office rental and other digital services.
What is the crypto policy in El Salvador?
El Salvador was the first to introduce Bitcoin as a legal tender equal to the USD. It also promotes digital assets education and training and has even launched its state-owned wallet.
Although there were some recent changes, El Salvador is still worth considering for a license.
Is there a crypto tax in El Salvador?
El Salvador has very lenient tax policies on digital assets, with many tax deductions for certain business types.
For example, you won’t pay capital gains tax on Bitcoin or income tax on earnings outside El Salvador.
Can I buy crypto in El Salvador?
Yes, you can buy Bitcoin. It was the first country to adopt Bitcoin as a currency, so it’s one of the most crypto-friendly governments in the world.
As a market, El Salvador has a growing number of crypto businesses, mainly due to tax benefits and its location in Central and South America.
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