EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera and Daniel Leiva, Torres Legal
of a regulated DASP, CNAD would play an important supervisory role if the entity becomes financially dis- tressed, particularly with respect to user protection, continuity of services, orderly suspension or limitation of activities, preservation of information, treatment of client assets and co-ordination of corrective meas- ures. This regulatory layer differentiates a licensed DASP from an unregulated crypto business. The analysis is also different for digital asset issuers. In tokenised issuances structured under the LEAD, the underlying assets, rights, cash flows, reserves or collateral supporting the issuance are normally iden- tified and structured within the issuance framework itself. As a result, if an issuer becomes insolvent, the general insolvency proceeding may apply to the issuer as a legal entity, but the rights of token holders over the underlying assets or economic rights should be analysed in accordance with the approved issuance documents, the relevant contractual structure and the asset segregation or protection mechanisms built into the offering. In properly structured issuances, this should provide a higher degree of protection to inves- tors than an ordinary unsecured creditor claim. Accordingly, El Salvador’s framework should not be described as lacking protections simply because it does not have a standalone digital asset insolvency statute. A more accurate description is that insolven- cy proceedings remain subject to general commer- cial and procedural law, while the LEAD and CNAD framework add a preventative regulatory layer through supervision, continuity requirements, compliance obli- gations, approval of issuance structures and user-pro- tection mechanisms. No major insolvency proceeding involving a LEAD- regulated entity has yet created settled case law in El Salvador. For that reason, practical uncertainties remain, especially regarding the ranking of token hold- ers, the treatment of assets held in custody, the trans- fer or cancellation of regulatory authorisations, and the interaction between court-led insolvency proceed- ings and CNAD’s supervisory powers. Market practice therefore continues to recommend robust asset seg- regation, clear custody arrangements, express token holder rights, business continuity planning and con-
tractual waterfall provisions in each regulated issu- ance or DASP operating model. 1.2.6 Industry and Trade Bodies The digital assets industry association landscape in El Salvador is still developing, and there is currently no formal SRO with delegated regulatory authority in the digital assets sector. Regulatory authority remains concentrated in CNAD, which serves as the primary institutional interlocutor, supervisor and standard- setter for the regulated industry. However, the Salvadoran ecosystem has evolved beyond a purely regulator-led model. CNAD has supported the creation and development of institu- tional spaces for industry co-ordination, education and dialogue, including the Centro de Innovación de Activos Digitales (CIAD). While CIAD should not be characterised as an SRO, it operates as an important platform for engagement between regulators, market participants, service providers, issuers and interna- tional stakeholders. A relevant example of this institutional development is the El Salvador Digital Assets Summit (DAS), promot- ed by CNAD as an annual platform to bring togeth- er public and private sector leaders in digital asset adoption, regulation and market development. CNAD describes the Summit as a forum to share El Salva- dor’s regulatory experience and promote the orderly and secure development of the digital asset sector. The DAS has become one of the leading events in Latin America focused specifically on digital asset regulation, bringing together regulators, policymak- ers, industry leaders and market participants to dis- cuss practical regulatory models and real-world use cases. In 2026, local reporting described the second edition as gathering more than 650 participants and official delegations from 17 countries, reinforcing El Salvador’s role as a regional reference point for digital asset regulation. Accordingly, while El Salvador does not yet have a private industry association or SRO with formal rule- making authority, the combination of CNAD, CIAD and the DAS provides an increasingly structured public- private ecosystem for regulatory dialogue, industry
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