EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera and Daniel Leiva, Torres Legal
ised activities, investment policies, valuation method- ology and risk management framework of the vehicle. Prudential and Conduct-of-Business Considerations For entities regulated by the SSF, including banks, insurers, pension funds, securities market participants and investment fund managers, crypto-asset expo- sure must be analysed under the general prudential framework. The SSF has not yet issued a specific pru- dential regime for crypto-asset exposure, so regulated entities must assess such exposure through existing rules on asset classification, provisioning, concentra- tion limits, operational risk, cybersecurity, outsourc- ing, custody, valuation and internal controls. From a conduct-of-business perspective, regulated firms must also consider investor suitability, disclo- sure, conflicts of interest, fair treatment of clients, risk warnings and governance. In the PAIF context, the regime is limited to sophisticated investors and is sub- ject to proportional supervision, with the SSF acting as the main supervisory authority and the BCR issuing Legal wrappers may improve structuring, asset segre- gation, governance and investor protection, but they do not eliminate regulatory analysis. Firms consider- ing fund structures with digital asset exposure in El Salvador should conduct a parallel review under both the LEAD/CNAD framework and the applicable SSF and PAIF/SICAF regime before launching any product or service. 2.4 Token Issuance El Salvador has one of the most developed crypto- asset issuance frameworks in Latin America. The Digital Assets Issuance Law provides a legal path for token launches, including debt tokens, equity tokens, revenue tokens, hybrid structures and RWA tokenisa- tions. The legal concept is not necessarily an ICO or TGE, but a public or private offering of digital assets. To launch from El Salvador, an issuer would generally need to: applicable technical norms. Parallel Regulatory Analysis
• incorporate or register a Salvadoran entity; • structure the token rights; • prepare the issuance documentation; • appoint a registered certifier; • file the offering with CNAD; and • obtain registration or approval before marketing or selling the token. If the project also involves custody, exchange, trans- fer, placement, administration or advisory services, a registered DASP may also be required. Disclosure and RID Requirements Regulated offerings require formal disclosure docu- mentation. The key document is the Relevant Informa- tion Document (RID), which functions as the equiva- lent of a prospectus or whitepaper within the CNAD framework. For public offerings, the RID must describe the issuer, token rights, use of proceeds, risk factors, financial information, technology, smart contract mechanics, custody arrangements, AML/CFT controls, fees, con- flicts of interest and the legal link to any underlying asset or cash flow. Private offerings are subject to lighter requirements, but remain regulated and must comply with minimum disclosure, registration and investor qualification standards. Foreign issuers selling into El Salvador should assess whether their marketing, platform access or investor base creates a Salvadoran nexus requiring CNAD reg- istration. 2.5 Market Abuse Market Abuse and Insider Trading Framework El Salvador does not yet have a comprehensive digi- tal asset market abuse regime equivalent to the EU Market Abuse Regulation. However, the LEAD and the CNAD framework contain investor protection and market integrity principles that allow the regulator to address abusive conduct within the regulated digital asset ecosystem. In addition, CNAD regulations for issuers and public or private offerings define privileged information as any
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