EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera and Daniel Leiva, Torres Legal
payment stablecoin” frameworks being developed in other jurisdictions. The LEAD and CNAD’s stablecoin regulation do not establish a distinct legal category for stablecoins based solely on their size, circulation, number of users or potential systemic impact. However, systemic relevance would likely affect the intensity of CNAD’s supervisory review. A stablecoin with large circulation, significant redemption expo- sure, cross-border use, institutional adoption or con- nection to payment infrastructure would be expected to face closer scrutiny regarding reserves, custody, redemption mechanics, liquidity, governance, opera- tional resilience, AML/CFT controls, cybersecurity, reporting and user protection. If the stablecoin is connected to banking infrastruc- ture, fiat settlement, payment rails or broader financial market activity, the BCR and SSF may also become relevant from a financial stability or payment systems perspective. Accordingly, while there is no standalone systemic stablecoin regime, issuers of large-scale stablecoins should expect a more rigorous regulatory review and should prepare enhanced disclosures, reserve verifi- cation, stress analysis, governance controls and con- tinuity arrangements. 7. Tokenisation and Real-World Assets 7.1 Treatment Tokenised RWAs are generally regulated through a dual analysis in El Salvador. The token itself may fall under the LEAD and CNAD framework, while the
underlying asset remains subject to the ordinary legal regime applicable to that asset. In practical terms, tokenisation does not eliminate or replace the legal requirements that apply to the non- blockchain equivalent. For example, tokenised real estate must still respect notarial, property registry and ownership transfer rules; tokenised receivables must still be validly assigned or pledged; and tokenised cor- porate or fund interests may trigger corporate, securi- ties, fund or SSF-related analysis, as discussed in 2.3 Regulated Firms and Legal Wrappers . The LEAD provides the regulatory framework for the issuance, offering and trading of the digital asset. The relevant offering documentation must clearly define the issuer, the token rights, the underlying asset, the legal mechanism connecting the token holder to that asset or cash flow, custody or collateral arrange- ments, risk factors and enforcement mechanics. Compared with traditional non-tokenised structures, RWA tokenisations are subject to an additional layer of CNAD registration, disclosure and supervision when offered publicly or privately as digital assets. However, they may also benefit from the advantages of the Sal- vadoran digital asset regime, including greater flex- ibility for cross-border distribution, blockchain-based transferability, automated settlement and potential tax benefits under the LEAD where the structure falls within the regulated ecosystem. Accordingly, tokenisation is best understood as a reg- ulated digital wrapper over an underlying legal asset. The key issue is ensuring that the on-chain token accurately reflects enforceable off-chain rights.
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