EL SALVADOR Trends and Developments Contributed by: Héctor Torres, Torres Legal
Tokenisation in El Salvador: Where the Legal Perimeter Creates Real-World Opportunity El Salvador is no longer just “the Bitcoin country”. The jurisdiction has moved into a more mature, com- pliance-first phase that quietly widens the runway for tokenisation – the issuance of digital instruments rep- resenting claims on cash flows, real-world assets or project revenues. Since 2023, the Digital Assets Law ( Ley de Emisión de Activos Digitales LEAD) has pro- vided a bespoke regime for non-Bitcoin instruments. In early 2025, Congress also amended the Bitcoin Law so that acceptance by merchants is voluntary, reduc- ing friction in ordinary commerce while strategically ensuring that crypto is still welcome. Together with the country’s new data protection and cybersecurity statutes, issuers and investors can now map risk with greater predictability. For sophisticated sponsors, the opportunity is not speculative: tokenised financing can reduce time to capital for mid-market borrowers, lower operational costs in structured instruments, and open distribution to regional and global investors who value on-chain settlement and transparent, rule-driven covenants. The benefits – speed, fractional access and program- mability – are amplified in a dollarised economy with deep remittance flows, strong payment rails and a pragmatic supervisory posture. The legal perimeter: clarity where it matters Three pillars shape the Salvadoran tokenisation perimeter, as follows. • LEAD (2023): A purpose-built framework for issuing digital assets other than Bitcoin. It sets out regis- tration, disclosure and authorisation mechanics for issuers and service providers, and contemplates a supervisory authority architecture that market participants can review. This is not a “light-touch” exemption; it is a rules-based path to offer onshore instruments to the public. • The Bitcoin Law amendment (January 2025): Busi- nesses are no longer required to accept Bitcoin, addressing a persistent “pain point” for retail and B2B contracting while maintaining Bitcoin’s legal- tender status. For tokenisation, this removes a distraction and keeps the public narrative focused
where value accrues: compliant issuance, custody, transparency and investor protection. • Privacy and cybersecurity laws (November 2024): The Personal Data Protection Law and the Cyber- security and Information Security Law formalise baseline requirements – lawful processing bases, cross-border transfers, breach duties and gov- ernance – familiar to global compliance teams. Tokenised flows depend on data, identity and secure infrastructure; these statutes make privacy/ cyber readiness a quantifiable workstream in every issuance, rather than a grey area. The practical outcome is a jurisdiction where issuers can select from three tracks: • bitcoin-adjacent initiatives for payments or treasury use; • LEAD-route token offerings for debt/equity-like instruments and revenue-share structures; and • traditional securities in offshore venues paired with Salvadoran assets or obligors. The second track is the engine for real-economy tokenisation. Why tokenise here? Five tangible advantages Dollarisation and settlement finality El Salvador’s economy uses the US dollar. Tokenised notes or revenue shares denominated in USD avoid foreign exchange (FX) slippage and make coupon and redemption logic intuitive for global limited partners (LPs). On-chain rails can deliver near-instant, time- stamped settlement and machine-readable cove- Traditional placements in Central America often start at seven figures. Tokenisation enables fractional access without bespoke side letters, while whitelist- ing and transfer restrictions can be coded into the instrument itself to respect offering perimeter rules. Programmability for compliance Issuers can embed transfer rules (eg, only to KYC- approved wallets), automatic coupon waterfalls and step-up coupons tied to oracles (eg, project key performance indicators; KPIs). This reduces agency work and post-trade disputes. LEAD’s disclosure and nants, reducing reconciliation costs. Smaller tickets, broader distribution
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