EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera and Daniel Leiva, Torres Legal
dor remains largely unsettled. The country’s IP regime is governed principally by the Law on Intellectual Property ( Ley de Propiedad Intelectual ) and the Law on Industrial Property ( Ley de Propiedad Industrial ), and neither statute has been amended to specifically address the treatment of digital or tokenised assets as IP. In practice, NFTs and other blockchain-based rep- resentations of creative or intangible assets are not yet subject to dedicated IP regulation. Parties routinely rely on contractual arrangements to allocate IP rights in token offerings – a practice that introduces legal risk in the absence of statutory recognition. 1.1.2 Regulatory Sandbox El Salvador does not currently maintain a formal, general-purpose regulatory sandbox designed spe- cifically for blockchain-based projects in the same manner as, for example, the UK FCA sandbox or the Singapore MAS Fintech Regulatory Sandbox. How- ever, in practical terms, the Salvadoran digital assets framework has operated with several sandbox-like characteristics. Rather than creating a separate experimental regime, El Salvador adopted a dedicated legal and regula- tory framework through the Digital Assets Issuance Law, supported by the supervision and case-by-case engagement of the National Commission of Digital Assets. This has allowed innovative projects to be structured, reviewed, adjusted and approved within a formal legal environment, instead of being tested outside or at the margins of the law. In that sense, although El Salvador has not formally created a regulatory sandbox, its legislation, regulato- ry practice and approved use cases have become an international example of good practice. The framework has shown that innovation can be supported through clear rules, specialised supervision and practical regu- latory dialogue, while still preserving legal certainty, investor protection and institutional oversight. The Salvadoran model is particularly relevant because it does not depend on temporary exemptions or infor- mal experimentation; instead, it provides a coherent legal architecture for digital asset issuances, DASPs and blockchain-based financial structures. The experience of the country demonstrates that a well-
designed regulatory framework can achieve many of the benefits traditionally associated with a sandbox while offering greater certainty to issuers, platforms, investors and global market participants. This approach has allowed El Salvador to position itself as a jurisdiction where blockchain and digital asset projects can be launched under a clear and supervised legal framework, with domestic applica- tion but international relevance. It is worth noting that the broader financial innovation environment is supported by the Superintendencia del Sistema Financiero (SSF), which has general oversight of the financial system and has expressed openness to fintech innovation within its existing supervisory remit, although no formal fintech or blockchain sand- box under SSF auspices has been announced as of the date of this publication. 1.1.3 Regulation of Blockchain Technology Pro-Innovation Regulatory Approach El Salvador’s government and regulators have adopt- ed a generally pro-innovation approach towards blockchain and digital asset industries. The policy focus has not been to restrict the industry, but to cre- ate a regulated environment where blockchain-based financial products can be launched with legal certain- ty, supervision and investor protection. This approach is reflected in the Bitcoin Law, the Digi- tal Assets Issuance Law and the creation of CNAD as the specialised regulator for digital assets. CNAD’s role is both supervisory and developmental, seeking to promote innovation while maintaining a safe and compliant market environment. The main use cases encouraged in practice include tokenisation of RWAs, stablecoins, regulated digital asset issuances, DASP activities, blockchain-based capital raising and financial inclusion projects. No blockchain use case is generally prohibited as such, although activities involving fraud, unauthorised pub- lic offerings, money laundering, market manipulation or unlicensed regulated services would be subject to regulatory or criminal enforcement.
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