EL SALVADOR Trends and Developments Contributed by: Héctor Torres, Torres Legal
purpose limitation should be built into products, and cross-border transfer mechanisms – eg, stand- ard contractual clause (SCC)-type arrangements – consistent with the new law should be selected. Finally, everything should be documented; tokeni- sation leaves an audit trail, which should be used. • Market integrity and secondary liquidity: Tokenisa- tion can widen distribution but cannot manufacture demand. Anchor investors who understand the asset and will provide price discovery should be sought, and periodic auctions should be consid- ered instead of constant order books to avoid thin market volatility. Policy context: pragmatic signals investors notice The IMF-linked amendment to the Bitcoin Law marked a pivot towards practicality over symbolism. By end- ing mandatory acceptance, lawmakers helped de- politicise commercial flows while retaining Bitcoin’s legal tender status. This fits a pattern: keeping the door open to digital assets, but building the compli- ance scaffolding – privacy, cyber, disclosure – so that institutional investors can participate; markets price that predictability. Rights groups have criticised aspects of the priva- cy/cyber package; investors should be aware of the broader governance debate. From a financing per- spective, however, the immediate effect has been positive: clearer data/cyber baselines make vendor diligence faster and warranty and indemnity (W&I) insurance more attainable for tech-heavy transac- tions, even if underwriters maintain exclusions for known issues. A practical playbook for first-time issuers For companies planning a tokenised issuance within the next 6–12 months, the following sequence tends to de-risk execution. • Choose the asset and cash flow logic: Is this a revenue share, a secured note or participation in a receivables pool? KPIs and oracles should be documented (what data, from whom, at what cadence and with what assurance). • Run a perimeter check under LEAD: Confirm the issuer category, required authorisations, service provider registrations and contents of the offering
document, and align marketing plans with filing status. • Build privacy/cyber readiness into onboard- ing. Map data flows; set lawful bases; draft data processing agreements (DPAs) with custodians, KYC vendors and analytics providers; and prepare incident playbooks and breach notification trees. • Select custody and choose your chain: where keys will live, who signs, and the business continuity and migration options should be documented in the offering memorandum. • Design secondary liquidity: Pick windows (eg, quarterly auctions), eligibility criteria and transfer restrictions, and ensure code enforces the legal perimeter. • Rehearse disclosures. Dry-run the dashboard and covenant reporting before launch. If the investor experience is clunky, fix it now – not after capital is at risk. Looking ahead: where tokenisation can move the needle The following are expected to promote tokenisation adoption in El Salvador over the next 24 months. • Payments and merchant networks: Acquirers and independent sales organisations (ISOs) can tokenise revenue shares on merchant cohorts, with performance-linked coupons calibrated to charge volume and fraud loss. With remittances and quick response (QR) codes becoming more ubiquitous, the data needed for oracles already exists. • Industrial decarbonisation and grid-adjacent assets: Tokenised notes funding distributed gen- eration, storage or efficiency retrofits can align returns with measured savings. Asset-level telem- etry feeds covenant dashboards; token holders are paid from verified kilowatt/hour outcomes. • Real-asset funds with programmable constraints. Closed-end vehicles can issue tokenised LP inter- ests with coded concentration limits, ESG attesta- tion points and general partner (GP) carry logic. The on-chain record simplifies audits and reduces disputes at exit. • The north star is simple: finance should be faster, safer and cheaper for good projects. Tokenisation, done in a regulated way, can deliver that – espe- cially in a dollarised, trade-exposed economy
120 CHAMBERS.COM
Powered by FlippingBook