EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera and Daniel Leiva, Torres Legal
In practice, CNAD reviews whether the applicant can operate safely, continuously and in compliance with
counterparties or institutional clients, as it evidences that the entity is subject to a specialised digital asset framework, AML/CFT obligations, governance stand- ards and regulatory supervision in El Salvador. Any firm seeking to operate outside El Salvador must therefore conduct a separate regulatory analysis in each target jurisdiction and, where required, obtain the relevant local licence, registration or legal opinion. The Salvadoran licence may support the application process, but it does not replace local authorisation. Conversely, a foreign digital asset licence does not automatically allow a firm to operate in El Salvador. If the activity has a Salvadoran nexus or is directed at Salvadoran clients, separate CNAD registration may be required. Cross-border marketing of blockchain or digital asset services into El Salvador may trigger regulatory requirements where the activity falls within the scope of the LEAD or CNAD regulations. A foreign firm may be required to register with or obtain approval from CNAD if it: • directs a public or private offering of digital assets to Salvadoran investors; • actively markets digital asset services in El Salva- dor; or • provides regulated PSAD services with a sufficient Salvadoran nexus. Public offerings are subject to the disclosure require- ments described in 2.4Token Issuance , including reg- istration of the relevant offering documentation with CNAD prior to marketing. Reverse Solicitation and Exemptions The LEAD does not contain an express reverse solici- tation exemption. A purely passive relationship initi- ated by a Salvadoran client, without prior marketing, solicitation or targeting by the foreign firm, may reduce regulatory risk, but it should be analysed carefully. 4. Cross-Border Services 4.1 Marketing Cross-Border Marketing into El Salvador
the regulatory framework. 3.3 Change of Control
Any acquisition or transaction resulting in a change of control of a registered DASP, issuer or other CNAD- regulated participant must be reviewed from a regula- tory reporting perspective. CNAD must be informed of any relevant change in ownership, ultimate beneficial ownership, control, governance, board composition, senior management or operating structure. Under the DASP Regulation, relevant changes must be reported to CNAD within five business days follow- ing the materialisation of the change. However, the change is not subject to prior CNAD approval as a condition for its validity, unless another specific regu- latory requirement applies. This obligation may apply not only to direct share transfers, but also to indi- rect acquisitions at holding company level, mergers, restructurings, voting arrangements or other trans- actions that materially affect control of the regulated entity. In practice, the acquiring party should be prepared to provide corporate, ownership, AML/CFT, source- of-funds, fit-and-proper and financial information if requested by CNAD, so the regulator can assess whether the entity continues to meet its authorisation conditions. Transaction documents should therefore include regulatory notice obligations, co-operation covenants and information-sharing provisions. A buy- er should not assume that acquiring a licensed entity avoids regulatory scrutiny, even if the change itself is not subject to prior approval. 3.4 Passporting A CNAD licence or registration obtained in El Salvador does not provide formal passporting rights into other jurisdictions. There are currently no mutual recognition or equivalence arrangements under which a CNAD- authorised DASP, issuer or certifier may automatically operate in another country without complying with the local regulatory requirements of that jurisdiction. However, CNAD authorisation may provide practical value when approaching foreign regulators, banks,
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