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LEGISLATIVE DECREE N° 43/2023
THE LEGISLATIVE ASSEMBLY OF THE REPUBLIC OF EL SALVADOR.
WHEREAS:
I. That article 101 of the Salvadoran Constitution states that the State shall promote economic and social development through the increase of production, productivity and the rational use of resources, and shall also promote the various sectors of industry, commerce and services; and therefore, it must harmonize the existing laws with the most relevant changes in the global economy;
II. That in accordance with Article 102 of the Constitution of the Republic, the State has the obligation to promote and protect private initiative, generating the necessary conditions to increase national wealth for the benefit of the greatest number of citizens;
III. That the global economic environment is increasingly interrelated and more digitized; and as a consequence, El Salvador must adopt innovative measures that allow it to compete for the attraction of direct foreign investment of important technological companies;
IV. Given that the Legislative Assembly approved on June 9, 2021 the Bitcoin Law, thus legalizing said digital assets in the country and considering that this has created a new important sector in our economy, it is crucial to create mechanisms that allow public and private sector entities to carry out public offerings of digital assets;
V. That in view of the fact that the market of financing through digital assets has had a very important increase during the last years, it is crucial to establish regulatory frameworks that control such issuances in the country;
VI. Given that the digital assets market has grown in an accelerated manner during the last twelve years, it is essential to allow the State, autonomous institutions, the Central Reserve Bank and the private sector to finance themselves in this new market;
VIII. That since public offerings, seek to be financed with resources from the general public, clear legal rules must be established to protect the interest of investors;
IX. To meet the above considerations, it is essential to issue rules that regulate the issuance of public offerings of digital assets, as well as the provision of digital asset services.
THEREFORE,
Exercising its constitutional powers and at the initiative of the President of the Republic, through the Minister of Economy,
DECREES the following:
Digital Assets Issuance Law
Chapter I
General Aspects
Object of the Law
Art. 1.- The purpose of this Law is to establish the legal framework that grants legal certainty to the operations of transfer to any title of digital assets that are used in the issuances of public offerings carried out in the territory of El Salvador; as well as to regulate the requirements and obligations of the issuers, services providers of digital assets, and other participants that operate in the process of public offerings, with the objective of promoting the efficient development of the market of digital assets and protecting the interests of the acquirers.
Scope
Art. 2.- This Law is applicable to public offerings of digital assets in the territory of El Salvador, as well as to issuers and service providers of digital assets and other participants in public offerings.
Digital Asset
Art. 3.- A digital asset is a digital representation that may be stored and transferred electronically, using a Distributed Ledger Technology system, or similar or analogous technology, in which the records are linked and encrypted to protect the security and privacy of the transactions.
As an essential characteristic, digital assets may be owned, exchanged, transferred, traded and promoted by individuals and legal entities.
Digital assets are not considered as security titles and therefore the provisions regarding security titles contained in the Code of Commerce will not be applicable in any aspect, nor those established in the Securities Market Law, in the Electronic Securities Law, in the Law of Electronic Annotations of Securities in Account or in the Investments Law.
Exclusions
Art. 4.- The provisions of this Law are not applicable to:
a) Digital currencies issued by the central banks of any country, jurisdiction or territory;
b) Digital assets that by a law prior or subsequent to the present are legal tender in any country, territory or jurisdiction, as to its monetary regulation, and when the use is for the exchange of goods and services, excepting the goods categorized as digital assets and the services set forth in Articles 19 and 26 of this Law;
c) Digital assets that can only be exchanged for a good or service that is provided by the issuer of that digital asset or by a limited number of providers of that good or service; and,
d) Digital assets that cannot be traded or exchanged.
Definitions
Art. 5.- For the purposes of this Law, the terms detailed below shall have the following definitions:
a) Reference Asset: An asset that serves as a basis or reference to determine the price or value of a digital asset, such as fiat money, intangible assets or stablecoins;
b) Digital Wallet: An electronic device or mobile application that allows transactions through the exchange of units of digital assets and fiat money;
c) Certifier: Legal entity that performs a financial, legal, technical and administrative analysis of the material and relevant information of the public offerings contained in the Relevant Information Document, and issues and submits a report to the National Commission of Digital Assets on the issuer’s compliance with the formal and material obligations;
d) Smart Contract: A computer program, which uses Distributed Ledger Technology or a similar one, and which is implemented when certain predetermined conditions are met; and is typically used to automate the execution of an agreement so that all participants can be certain of the outcome, without the need for an intermediary. Depending on the agreement between the parties, such programs may be self-executing, judicially executed, or executed in mixture of both;
e) Stablecoin: A type of digital asset designed to minimize price volatility and that references, represents or is backed by an asset or pool of assets;
f) Derivative Digital Asset: A type of contract that uses a digital asset as its underlying digital asset or is paid in digital assets, such as futures, options and swaps;
g) Underlying Digital Asset: Is a digital asset that serves as the basis or reference for determining the price or value of a digital asset;
h) Fiat Money: A type of money represented by book entries, usually held in bank deposit accounts;
i) Relevant Information Document: A document that informs the general public of the most relevant aspects of any public offering of digital assets, such as the clear identification of the issuer, the characteristics and objectives of the issue. Such document shall identify whether the interest, gains, income or yields of the public offering will be paid with Fiat Money or Digital Assets;
j) Issuer: means the State or a natural person or legal entity, private or public, that makes or promotes an offer to the public of digital assets or seeks admission of a digital asset for the purpose of selling or trading it on an exchange or trading platform, centralized or decentralized, whether regulated or not, and that complies with one or more of the following three conditions:
1. It is domiciled in El Salvador;
2. Is not domiciled in El Salvador but uses an exchange or trading platform that is domiciled in the country;
3. It is not domiciled in El Salvador, but its purpose is to promote or make a public offering of digital assets to potential acquirers in El Salvador, except in the case in which the potential acquirers initiate the commercial relationship with the offeror of such digital assets on their own account.
A digital asset service provider that admits the trading of digital assets in its trading platform is not, by the mere fact of accepting such trading in its platform, an issuer.
k) Public Offering of Digital Assets: It is a technical or commercial proposal made to the general public, on a massive basis, and with the objective of trading or selling Digital Assets;
l) Debt Public Offering: It is a type of public offering of Digital Assets which establishes a credit of the issuing entity or another entity in favor of the acquirer;
m) Ownership Public Offering: It is a type of public offering of digital assets which establishes a property right in favor of the acquirer in the issuing entity or in another entity;
n) Income Public Offering: It is a type of public offering of digital assets which establishes a right of the acquirer to receive income or flows of trust money or digital assets of any nature, including gains, profits or returns;
o) Funds: Economic resources obtained from bills and coins, Fiat Money, electronic money and Digital Assets;
p) Market Integrity: Is the fair, efficient and transparent access to a market in terms of pricing information, trading practices and disclosure standards;
q) Uniform Resource Locator (better known by the acronym URL): A string of characters that assigns a unique address to each of the information resources available on the Internet;
r) Primary Market: A market in which issuers and acquirers participate through a centralized or decentralized platform in the trading of public offerings of digital assets, regulated or not, in the purchase and sale of such digital assets when they are offered to the public for the first time;
s) Secondary Market: a market in which digital assets are traded for the second or more times by the acquirers or their representatives, without the intervention of the issuers;
t) Node: It is a point of intersection, union or connection of real or abstract form where several elements that communicate with each other meet, and that contain a sequence of commands which contributes to the general sequence of commands of a digital or computer system;
u) Digital Platforms: Digital infrastructures that allow two or more acquirers to interact and exchange digital assets for other digital assets or fiat money;
v) Digital Asset Service Provider: A natural or legal person whose ordinary line of business involves rendering one or more of the digital asset services detailed in Article 19 of this Law, and who complies with one of the following two conditions:
1. It is domiciled in El Salvador;
2. It is not domiciled in El Salvador, but actively promotes or markets services to potential clients in the country.
w) Digital Asset Services: Refers to the services detailed in Article 19 of this Law;
x) Public Offerings of Digital Assets Regulations: Refers to the laws, regulations, instructions, technical standards, guides, and any regulations issued by the competent authority that are used for public offerings of digital assets;
y) Distributed Ledger Technology: It is a database system in which information is consensually recorded, shared and synchronized in a network of multiple nodes and in which most copies of the databases are considered equally authentic;
z) Token: It is a digital asset that is used as a unit of account in a network, based on the Distributed Ledger Technology or a similar or analogous;
The regulations of this Law may develop additional terms for the better functioning of the digital asset market.
Chapter II
The National Commission of Digital Assets
Creation and Domicile
Art. 6.- The National Commission on Digital Assets, which in the text of this Law may be referred to as “The Commission”, is hereby created as a public law institution with legal personality and its own assets, of a technical nature, with economic, financial and administrative autonomy, for the exercise of the powers and duties stipulated in this Law and in the rest of the applicable legislation.
The National Commission of Digital Assets will be related to the Executive Branch through the Ministry of Economy.
The Commission shall have its domicile in the city of San Salvador and shall be empowered to establish offices anywhere in the national territory and abroad.
Competent Organism
Art. 7.- The National Commission of Digital Assets shall be in charge of the application of the regulations described in this Law, its regulations and other rules of public offerings of digital assets.
The Commission in its actions related to public offerings of digital assets shall balance the rights of the acquirers of digital assets and the general public, the promotion of innovation and competitiveness.
Protection of the Acquirers of Digital Assets
Art. 8.- The National Commission of Digital Assets shall verify that the issuance of public offerings of digital assets are carried out in accordance with the applicable obligations, ensuring the integrity of the market and the provision of due information to the acquirers.
Powers of the National Commission on Digital Assets
Art. 9.- The Commission shall have the following powers:
a) Promote and strengthen the conditions conducive to the development of the digital assets market in El Salvador;
b) Resolve on the authorization of public offerings and any other request submitted to the Commission; and authorize, suspend or cancel public offerings that violate provisions of this Law and its regulations;
c) Manage and constantly update the Issuers’ Records, Certifiers, Service Providers of Digital Assets and Public Offerings of Digital Assets;
d) Authorize, suspend, revoke and cancel the registration of Digital Asset Service Providers, in accordance with the provisions of this Law and its regulations, as well as suspend negotiations and operations of digital assets;
e) Establish mechanisms for safeguarding digital assets issued in public offerings;
f) Authorize, suspend, revoke and cancel the registration of certifiers;
g) Register and deregister issuers in the respective registry;
h) In case of default for cause by any issuer, it may suspend the sale or marketing of the digital assets of such issuer;
i) Establish standards of good business conduct and ethical standards to be followed by digital asset service providers, such violations could result in sanctions;
j) To certify the Relevant Information Documents in the event that there is no authorized certifiers authorized;
k) Examine, oversee and supervise the activities of the Digital Asset Service Providers and any other entity subject to the supervision of this Commission;
l) Ensure that the Digital Asset Service Providers, Certifiers, Issuers and Acquirers comply with this Law and its regulations;
m) To carry out inspections, proceedings and investigations established in the regulations of this Law;
n) To impose the sanctions established in this Law;
o) To dictate regulations and technical standards, as well as guides and instructions, applicable to this Law and its regulations;
p) To issue, reform and revoke agreements, guides and instructions regarding the application of this Law and its regulations;
q) Issue guidelines and technical regulations applicable to stable currencies, including proof of funds or backing of the value of such currencies, as well as all relevant documentation that issuers of such digital assets must submit to the Commission in order to carry out public offerings;
r) To settle consensual agreements between the subjects under the scope of this Law, when there is a risk to the integrity of the digital asset market;
s) To acquire and dispose of, under any title and in accordance with the applicable regulations, the goods and services necessary for the fulfillment of its objectives;
t) To issue its internal regulations and establish its organizational structure;
u) Charge fees for the registration of Digital Asset Service Providers and Certifiers, as well as for their administration and issuance of respective certifications;
v) To collect the fees for the authorization of public offerings and certifications established in this Law.
Organization and Operation
Art. 10.- The highest authority of the Commission shall be the Board of Directors, which shall be composed as follows:
a) A full-time proprietary director, who shall be the President of the Commission, and his/her respective alternate, appointed by the President of the Republic.
b) One full-time proprietary director and his/her respective alternate, appointed by the Secretariat of Commerce and Investment of the Republic;
c) A full-time proprietary director and his/her respective alternate, appointed by the Ministry of Economy.
The Directors shall be appointed for a period of five years.
The President of the Commission shall be responsible for its legal, judicial and extrajudicial representation.
The Board of Directors of the Commission shall meet at least once a month, upon convocation by its Chairman.
In order to hold a meeting, the presence of the Chairman or whoever is acting in his/her stead, and the presence of all the proprietary members or their respective alternates, when they are acting as proprietary members, shall be necessary.
The resolutions or agreements of the Board of Directors of the Commission shall be adopted with at least two votes of the members present. When they do not replace a regular member, the alternate members of the Board of Directors may attend its meetings with voice, but without vote.
Powers of the Board of Directors
Art. 11.- The Board of Directors shall have the following powers:
a) Approve strategies for the promotion of investments in digital assets, in accordance with the policies of the Government;
b) Approve and modify the road map and financial programming of the Commission;
c) Approve the preliminary draft budget for each fiscal year, the salary system for the administration and operation of the Commission, and send it to the Ministry of Economy, so that it can be incorporated into the budget of the Ministry of Economy;
d) Approve the organizational structure of the Commission for its operation and the manual of the job descriptions;
e) Create the committees of digital asset advisors and trainers;
f) Authorize the contracting of the external audit;
g) To authorize the Chairman of the Board of Directors to initiate preliminary negotiations for donations, in accordance with the law, in order to fulfill the purposes of the Commission;
h) Approve the amount of the payments for services rendered by the Commission;
i) Approve the Internal Working Regulations of the Commission, as well as other applicable internal regulations;
j) To evaluate the results obtained and reorienting strategies, when necessary;
k) To enter into acts, agreements and contracts with individuals or legal entities, as well as with public or private, national or foreign entities;
l) Incorporate corporations, joint stock companies or any other type of company to make investments for the benefit of the Commission;
m) To issue special regulations of a technical and operational nature;
n) Such others as may be necessary for the fulfillment of the purposes of the Commission, within the framework of this Law.
Fees and Charges
Art. 12.- The fees for the registration and administration services of the Registry of Digital Asset Service Providers, as well as for the authorization of public offerings, shall be as follows:
1) The Digital Asset Service Providers, including the Certifiers, shall:
a) Onetime payment, an initial registration fee equivalent to fifteen minimum salaries of the commerce and services sector;
b) Pay an annual registration renewal fee equivalent to ten minimum salaries of the commerce and services sector during the first quarter of the year;
c) Pay fifty dollars of the United States of America, or its equivalent in bitcoin, for each additional registration certification to the original issued to them.
2) Issuers shall:
a) Pay an amount equal to zero point zero one percent (0.01%) of the amount of the issuance authorized of the public offering at the time of receiving the authorization for the requested issuance, as established in the Relevant Information Document;
b) Pay fifty dollars of the United States of America, or its equivalent in bitcoin, for each certification of the resolution issued by the issuance authorization.
In the case of issuers of stable coins, they must report the amount of stable coins they plan to issue during the next twelve months and pay the corresponding fee for that amount. In case the amount issued is greater than the projected amount at the end of the twelve months, they must pay the corresponding fee for the stable coins that were not included in the initial projection.
The State, the Ministry of Finance, the Central Reserve Bank of El Salvador and the autonomous institutions are exempted from the rates and charges established in this article.
Additionally, the Commission may charge for services rendered to digital asset service providers, issuers, certifiers, acquirers and requesters of any type of information.
Chapter III
About the Bitcoin Fund Management Agency
Bitcoin Fund Management Agency
Art. 13.- The Bitcoin Funds Management Agency, which in the text of this Law may be referred to as “BMA” or “The Agency”, is hereby created as a public law institution with legal personality and its own assets, of a technical nature, with economic, financial and administrative autonomy, for the exercise of the powers and duties stipulated in this Law and in the rest of the applicable legislation.
The BMA will be related to the Executive Branch through the Ministry of Economy.
BMA shall have its domicile in the city of San Salvador and shall be empowered to establish offices anywhere in the national territory and abroad.
Competent Body
Art. 14.- The Bitcoin Fund Management Agency is responsible for the administration, safekeeping and investment of: i) the funds from the public offerings of digital assets made by the State of El Salvador and its autonomous institutions and ii) the returns from such public offerings.
The BMA in its actions related to the public offerings of digital assets shall prioritize the investment in public works and projects.
Organization
Art. 15.- The BMA shall be managed by an administrator appointed by the President of the Republic for a period of five years, who shall be responsible for the legal, judicial and extrajudicial representation of the Agency.
Powers
Art. 16.- The BMA shall have the following powers:
a) To manage and safeguard the funds of the public offerings made by the State of El Salvador or any of its autonomous institutions;
b) To diligently invest the funds from the public offerings made by the State or any of its autonomous institutions;
c) Prioritize the investment of the funds related to public works and projects that benefit the entire population;
d) Charge administration fees for the funds that invest and manages for an up of a maximum of zero point five percent;
e) To dictate its internal regulations and establish its organizational structure;
f) To supervise and control the entities in which it has made investments;
g) To carry out direct contracting as it deems necessary to carry out its operations, according to the procedure established in Chapter V, Title IV of the Public Administration Procurement and Contracting Law.
h) Sign cooperation agreements with the autonomous institutions and other entities related to public bids.
The BMA shall open bank or crypto accounts for the purpose of receiving, safeguarding, storing and disbursing funds from public offerings of digital assets issued by the State or any of its autonomous institutions.
Obligations
Art. 17.- The BMA shall have the following obligations:
a) To act with transparency and honesty in the management of the funds administered;
b) To render public report on a quarterly basis on the management of invested funds;
c) Diligently evaluate the projects in which it plans to invest;
d) When investing in equity and debt securities, to ensure that they present the lowest possible risk;
e) Constantly analyze new investment opportunities for the funds under management;
f) Any other obligation established by the regulations of this Law.
Chapter IV
Digital Asset Service Providers
Registry of Digital Asset Service Providers
Art. 18.- Law of The Registry of Digital Asset Services Providers, hereinafter referred to as the Registry, is hereby created and shall be administered by the National Commission of Digital Assets.
The following must be observed for the registration of Digital Asset Services Providers:
a) The Digital Asset Services Providers, regulated by this Law, may only offer and render digital asset services if they are registered with the National Commission of Digital Assets of El Salvador;
b) A Digital Asset Services Provider that is offering digital asset services prior to the coming into force of the regulation for the Registration of Digital Asset Service Providers shall be governed by the provisions of Article 44 of this Law;
c) Any natural person wishing to register in the Registry referred to in this article must present his/her Identity Document or resident card. Additionally, he/she must indicate his/her place of domicile in the country;
d) Any juridical person wishing to register in the Registry referred to in this article must present its legal personality. In the case of foreign legal persons domiciled in another country, jurisdiction or territory, they must form a corporation or branch, domiciled in El Salvador and duly registered in the National Registration Center, and submit the legal status of such corporation to the Commission.
The other aspects related to the organization and operation of the Registry, including the procedures and formats to be used for registration, modification or deregistration, which shall be integral and proportional to the nature, scale and complexity of the services to be provided by the applicant, and the nature of the digital assets and their derivatives, shall be developed in the respective regulations, established by this Law.
Digital Asset Services
Art. 19.- Digital asset service providers may perform the following activities:
a) Exchange of digital assets for fiat money or its equivalent or for other digital assets, either using their own capital or that of a third party;
b) Operating a platform for the exchange or trading of digital assets, or derivative digital assets;
c) Risk and price assessment and underwriting of digital asset issues;
d) Place digital assets on digital platforms or wallets;
e) Promote, structure and manage all types of investment products in digital assets;
f) The following operations when performed on behalf of and in favor of third parties:
1. Transferring digital assets or the means to access or control them, between natural or legal persons or between different acquirers, electronic wallets or digital asset accounts;
2. To safeguard, custody or manage digital assets or the means to access or control them;
3. Receive and transmit orders for the purchase or sale of digital assets or the trading of derivative digital assets;
4. Execute orders for the purchase or sale of derivative digital assets.
The National Commission of Digital Assets may, through technical and operational regulations, as well as instructions and guides, create procedures and define the necessary forms for the optimal implementation of the aforementioned services.
Requirements to become a Digital Asset Service Provider
Art. 20.- The requirements to register as a digital asset service provider are the following:
a) Demonstrate the ability to offer the digital services indicated in the registration form;
b) In case it offers the services set forth in letters a), b), d) and f) of the preceding article, provide a list of the digital assets it plans to sell or trade, including the benefits, restrictions, and limits of such digital assets, as well as any financial and commercial restrictions. It shall also implement appropriate cybersecurity standards relevant to its platform for the operations to be carried out, as defined by the Commission;
c) Provide a detailed description of its organizational structure, including but not limited to names, positions and specific functions;
d) Demonstrate that it has a coherent and efficient customer service system, corresponding to the nature of the service it will provide;
e) For service providers already registered, they shall pay an annual fee for the renewal of such registration during the first quarter of each year, regardless of the date of initial registration, according to amounts determined in this Law. In the event that payment is not verified during said period, its registration will be cancelled.
The Commission shall establish the technical, financial and commercial parameters to be complied with by the service providers through the regulations of this Law.
Once the information required in this Law and the corresponding regulations has been submitted to the digital asset service providers in the application format determined by the Commission, the Commission shall have a term of up to twenty (20) business days to issue a positive or negative resolution. In the event that the request is incomplete, it shall notify the applicant of such situation and shall warn the applicant to complete the information within five business days. Once all the missing information has been received, the Commission will issue its resolution. If the complete information is not submitted, the Commission will issue an negative resolution, and the service provider may file again its application for registration.
If the resolution is positive, the service provider must pay the fee established in this Law. After verification of compliance with the requirements and payment of the corresponding fee, a registration number will be assigned.
Registered service providers shall pay an annual fee for the renewal of such registration during the first quarter of each year, regardless of the date of initial registration, according to the amounts determined in this Law. In case payment is not verified during said period, their registration will be cancelled.
Obligations of the Digital Asset Service Providers
Art. 21.- The digital asset service providers shall comply with the following obligations:
a) Register as a digital asset service provider in the respective registry;
b) Carry out their activities with honesty and integrity, according to the guidelines of good business conduct and ethical standards established by the National Commission of Digital Assets;
c) Pay due attention to the interests and needs of each and every one of its customers and communicate with them in a clear, fair, balanced and non-deceptive manner, in accordance with the nature of the service provided;
d) To provide truthful and readily available information on their digital platforms about the services they offer;
e) To comply with the instructions of the National Commission of Digital Assets and other competent authorities and provide them the information they request;
f) Act diligently, according to the parameters and standards established by the National Commission of Digital Assets, when admitting the commercialization or sale of a digital asset in their platforms or infrastructure, as well as in the public offerings they promote and admit in their platforms, although they will not be responsible for the yields or returns offered by the issuers, nor for the veracity of the financial data they present to the public;
g) Establish a customer service department, accessible by telephone, e-mail or other easily accessible means;
h) Maintain adequate financial and non-financial resources, as established by the National Commission of Digital Assets;
i) Manage and control its business effectively, and conduct it with due skill, care and diligence, taking into account the risks to its business and its clients;
j) Provide and implement effective mechanisms for the protection of digital assets and fiat money of issuers and acquirers, when these are under its custody;
k) Provide and implement effective mechanisms to prevent price manipulation and maintain market integrity, as set forth in Articles 33, 34 and 35 of this Law;
l) Provide for and implement effective corporate governance mechanisms, when applicable;
m) Inform the Commission on a quarterly basis of the prices they charge for the services they offer, including all types of commissions and specific charges;
n) Implement computer systems that are secure and maintained with a high level of quality and cybersecurity, in accordance with the international criteria and parameters that have been adopted and established by the Commission;
o) Have systems in place to prevent, detect and disclose financial crime risks, such as money laundering and terrorist financing;
p) To have a contingency plan for the orderly and solvent liquidation of its activity;
q) Inform the Commission of the termination of its activities and request the deregistration of the corresponding registry;
r) Immediately inform the Commission each time they admit a stable currency for trading on their platform, including the technical and commercial characteristics of such stable currency.
Chapter V
Public Offerings
Section I
Issuers and Certifiers of Public Offerings
Requirements of the Issuers
Art. 22.- Issuers, including those issuing stable currencies, may carry out the public offerings regulated by this Law, provided they comply with the following requirements:
a) In the case of a legal entity, provide a general description of its business or usual line of business, including its date of incorporation and registration with the competent authority and domicile; and in the case of a natural person, full name, Identity Document number, resident card or passport number, and domicile;
b) Indicate the URL of its main website;
c) Clearly identify which are the jurisdictions, countries or territories where they carry out their operations;
d) Provide a list of digital assets that have been issued in public offerings in other jurisdictions, countries or territories during the last three years;
e) Comply with all requirements and conditions set forth in the regulations and technical standards issued by the Commission;
All the aforementioned information must be included in the Relevant Information Document that issuers must submit for their public offering to be certified and authorized. The requirements mentioned in the previous paragraph will be considered fulfilled once the issuer’s public offering is authorized by the Commission.
However, issuers shall report any modification to the information mentioned in the first paragraph of this article within a term no longer than ten working days from the date the modification was made.
With the exception of the requirement set forth in paragraph e) of this article, the following are exempted from the requirements mentioned in this article: The State, the Ministry of Finance and the Central Reserve Bank of El Salvador.
Issuer Registry
Art. 23.- Once the public offering of an issuer is authorized by the Commission, the issuer shall automatically become part of a registry of issuers administered by the National Commission of Digital Assets.
The other aspects related to the organization and operation of the Issuers Registry, including the procedures and formats to be used, shall be developed in the respective regulations.
De-registration of the Issuer’s Registry
Article 24 – The issuer’s registry shall be deregistered in the following circumstances:
a) When the issuers voluntarily request the National Commission of Digital Assets their deregistration, verifying that they have no qualifying public offerings pending issuance and have complied with their obligations in previous qualifying public offerings;
b) When one of the public offerings of an issuer was cancelled by the Commission, and it does not have pending compliance with obligations of previously enabled public offerings, the issuer will be unregistered from the Registry and may not be part of it again for a period of one calendar year;
c) In case the issuer has a qualified public offering pending to be issued, and another of its public offerings was cancelled by the Commission, it may not carry out the public offering that is qualified and will be unregistered from the Register and may not be part of it again for a period of one calendar year.
The regulations of this Law will establish the procedures for the suspension or cancellation of the registration of issuers.
Responsibilities of the Issuers
Art. 25.- Issuers shall be responsible for the veracity of the data they report in their public offerings, as well as for the information and documentation they provide to the certifiers and the Commission.
Issuers, either on their own account, or through a third party, shall have effective mechanisms to control and safeguard the funds, or other digital assets, obtained during the public offering. In addition, they shall explain the way in which the funds or other digital assets obtained during the public offering are held in custody.
In addition to the provisions of the preceding paragraphs of this article, issuers shall comply with the following obligations on an ongoing basis:
a) Act with honesty, impartiality and professionalism in all their dealings with acquirers and potential acquirers as provided by the Commission;
b) Maintain updated all information relevant to the requirements established in Article 22 of this Law, when applicable;
c) Keep books, records and other documents, in electronic form, of the operations related to the public offerings it has carried out in the manner prescribed by the National Commission of Digital Assets;
d) Comply with the obligations set forth in Articles 33, 34 and 35 of this Law;
e) Comply with the regulations, instructions, technical standards, guidelines and any other rules issued by the National Commission of Digital Assets.
Additionally, when making a public offering of digital assets, issuers must comply with the following obligations:
Perform a diligent analysis of the of the digital assets that are issued in their public offerings, both in its public offerings, both in their technical and commercial functionality;
a) Communicate the most relevant aspects of the public offer to the purchasers in a clear and not misleading manner;
b) Maintain relevant electronic records and documents related to the public offerings they make in the form indicated by the Commission;
c) File, prepare and keep updated their financial statements when requested by the Commission;
d) Submit, prepare and maintain updated financial statements when requested by the Commission;
e) Maintain at an URL address all information pertinent and relevant to the public offerings it has issued, including all information contained in the Relevant Information Documents of such public offerings.
The technical and operational regulations shall establish the procedure that issuers shall follow to make public offerings.
Role of the Certifiers
Art. 26.- Every public offering of digital assets shall comply with the qualification thereof, for which purpose, as a prior stage, the certifying entities shall perform a comprehensive analysis of the requirements of such public offering, contemplated in the law, regulations, instructions, technical standards, guides and any rules issued by the National Commission of Digital Assets. Subsequently, the certifiers shall issue a report containing their analysis of the viability of the proposed public offering, whether favorable or negative, which in any case shall be submitted to the Commission. Only favorable reports shall be considered certified.
Requirements for Certifiers
Art. 27.- In order to be a certifying entity, it must be registered before the National Commission of Digital Assets, and must comply with the following requirements: to be an entity that within its organization complies with a minimum experience of five (5) years in financial, tax, legal, administrative or related matters, which may be accredited personally by the partners or shareholders that compose the entity, who must hold university degrees of higher education, in order for the entity to assume the experience of its members.
Registration of Certifiers before the National Commission of Digital Assets
Art. 28.- The National Commission of Digital Assets shall keep a registry of the certifying entities authorized in the country, for which purpose it shall require the following information and duly legalized documentation:
a) Deed of incorporation of the company duly registered before the competent authority and the list of shareholders, which shall be updated annually;
b) Institutional organization chart;
c) International organizational structure, if applicable;
d) Curriculum vitae of the partners or shareholders, with their respective attachments and certifications of the titles that accredit them;
e) Initial balance sheet and financial documentation;
f) Current company registration;
g) Tax Identification Number.
Once the application for registration has been filed, the National Commission of Digital Assets will have a term of up to twenty (20) business days to issue a favorable or unfavorable resolution. In case the application is incomplete, it will notify the applicant of such situation and will warn the applicant to complete the information within five business days. Once all the missing information has been received, the Commission will issue its resolution. In case the complete information is not submitted, the Commission will issue an unfavorable resolution, and the entity may file again its application for registration.
If the resolution is favorable, the certifier must pay the fee established in this Law. After verification of compliance with the requirements and payment of the corresponding fee, a registration number will be assigned.
Registered certifiers shall pay an annual fee for the renewal of such registration during the first quarter of each year, regardless of the date of initial registration, according to the amounts determined in this Law. In case payment is not verified during said period, their registration will be cancelled.
Responsibility of the Certifiers
Art. 29.- The certifying entities shall have the following responsibilities:
a) Evaluate financially and technically the viability and feasibility of the public offerings proposed by the issuers;
b) Evaluate and report to the National Commission of Digital Assets on the financial, technical and legal risks of the public offerings proposed by the issuers;
c) Issue a comprehensive opinion, favorable or unfavorable, with respect to the certification of the proposed public offerings and communicate it to the National Commission of Digital Assets;
d) To keep the confidentiality of the information and documentation received by potential issuers;
e) Refrain from participating in or advising on any operation that generates indications of suspicion of illicit activities;
f) To inform the Attorney General’s Office of the Republic about possible illicit activities detected in the evaluation of the public offerings;
g) Comply with the regulations, instructions, technical standards, guides and any other rules issued by the National Commission of Digital Assets.
The technical and operational regulations shall establish the procedure that shall govern the work of the certifiers.
Section II
Public Offerings of Digital Assets
Issuance of Public Offerings of Digital Assets
Art. 30.- It shall be understood that there is an issue of a public offering of digital assets when these are offered to the general public, on a massive basis, and with the purpose of marketing or selling such digital assets.
The public offerings referred to in the preceding paragraph may be made by issuers, as defined in this law, using already existing digital assets, and building, through them, new digital assets, such as tokens offering a yield on a specific digital asset platform or creating entirely original digital assets by the issuer.
Public offerings may be carried out by the State, the Ministry of Finance, the Central Reserve Bank, autonomous institutions, as well as private individuals and legal entities.
Exclusions from Public Offerings of Digital Assets
Art. 31.- The offerings of digital assets or their derivatives that are made privately are excluded from the provisions of this Law relating to public offerings.
Relevant Information Document and Enabling of a Public Offering
Art. 32.- Every issuer shall prepare the Relevant Information Document when it plans to make a public offering.
The Relevant Information Document must be certified by an entity duly authorized by the National Commission of Digital Assets.
Once the document has been certified, it shall be submitted to the Commission for its authorization. Once the issue has been authorized, the Commission will make the content of the Relevant Information Document available to potential acquirers at its URL address.
The content and parameters to be included in this document, and the procedure for certification and qualification of the issue, will be established in the corresponding technical and operational regulations.
Admissions or requests for admission of a stable currency in a digital platform domiciled in El Salvador are excluded from the obligation to present the Relevant Information Document.
Competitiveness
Art. 33- Digital asset service providers are obliged to supply products at economically competitive prices and under economically competitive conditions. Such prices, including commissions or specific charges, shall bear a direct relation to the nature of the service provided. Digital asset service providers must inform the Commission of all prices and fees charged for the services they offer. In addition, they shall inform in a clear and visible manner to users, on the URL address of their main website or on their digital platforms and applications, all amounts charged, including all fees and specific charges.
Both issuers of public offerings and service providers of digital assets shall inform potential acquirers of the terms and conditions of the public offerings they make or market prior to the execution of the marketing, transfer or sale and purchase transaction. Acquirers are presumed to have given their consent and acceptance of the terms and conditions of the offer, as well as of their obligations and rights, when carrying out the transfer or purchase of digital assets.
In addition, digital asset service providers shall identify, with their identity documents and other necessary information, all acquirers of digital assets from public offerings enabled by the Commission that are traded on their digital platform or application. Additionally, they may also deny the sale or acquisition of a digital asset to any potential acquirer that does not comply with the identification and information transparency requirements mentioned above. The respective procedures regarding the identification and transparency of acquirers shall be developed in the respective regulation.
Issuers of public offerings and digital asset service providers shall refrain from the following actions, as applicable:
a) Transmitting or planning the issuance of false or misleading signals as to the public offering it issues, its demand or the price of the digital assets offered;
b) Fixing the price of one or several digital assets in coordination with other issuers or market participants in such a way as to cause unlawful enrichment for the issuers;
c) Carrying out a transaction, giving a trading order or any other activity or conduct that affects or may affect the price of one or several digital assets, using fictitious mechanisms or any other form of deception or artifice;
d) Disseminating information through the media, including the internet, or by any other means, involving false or misleading signals as to the supply, demand or price of a digital security;
e) Coordinate pricing mechanisms for digital assets offered;
f) To carry out actions that seriously undermine the stability and integrity of the digital asset market;
g) Coordinate schemes for the purchase of digital assets, prior to the issuance of the public offering, that result in unusually high prices for the network and technology in which the operation is developed;
h) Any other practice that the National Commission of Digital Assets through a reasoned resolution determines that inhibits the proper functioning of the market.
However, both issuers and service providers of digital assets have the power to design public offerings and marketing plans for digital assets that establish specific standards. Such standards may establish broad restrictions and limits on the purchase, trading or acquisition of digital assets for citizens or residents of certain jurisdictions, countries or territories.
Market Integrity
Art. 34.- Issuers and service providers of digital assets must implement appropriate measures to ensure that the market maintains its integrity and prevent market abuses and manipulated sales.
Any other action that the National Commission of Digital Assets establishes as a practice undermining the integrity of the market may be warned by means of a reasoned resolution issued by the Commission.
Market Manipulation
Art. 35.- Issuers and service providers of digital assets shall refrain from actions that result in market manipulation. Such actions are the following:
a) Damage or delay the operation of the digital asset trading platform or engage in any activity that may have that effect;
b) Make it difficult for others to identify genuine orders on the digital asset trading platform or engage in any activity that may have that effect, including issuing orders that destabilize the normal operation of a digital asset trading platform;
c) Creating a false or misleading signal about the supply, demand or price of a digital asset, in particular by issuing orders to initiate or exacerbate a trend or by engaging in any activity likely to have that effect;
d) Taking advantage of access to a traditional or electronic means of communication for the purpose of expressing an opinion on a digital asset after having carried out transactions for or against such digital asset and benefiting from the repercussions of the opinion expressed on the price of such digital asset, without having simultaneously disclosed the nature of such transactions and of their interests;
e) Any other action that the National Commission of Digital Assets establishes as a market manipulation practice by means of a reasoned resolution.
Benefits
Art. 36.- The issuers of digital assets, the service providers of digital assets duly registered, the certifiers, and the acquirers of digital assets, as well as the public offerings of digital assets, shall be governed by the following rules and shall enjoy the benefits detailed below:
a) The yield of digital assets shall be determined at the time of the transaction, in accordance with the conditions of the digital asset market. The digital assets may have a discount or premium, according to the practice of the digital asset market in which they are issued;
b) The nominal value and the yields or income from digital assets shall be exempt from all kinds of encumbrances shall be exempt from all kinds of levies, duties, taxes, fees and contributions, of any kind and nature, present or future, whether ordinary or extraordinary or even special. The capital gain or ordinary income obtained from the sale and purchase or any other means of transfer of digital assets, including debt forgiveness, shall be exempt from any kind of taxation;
c) The issuers, certifiers, and registered digital asset service providers shall enjoy all the tax benefits established in letter b) of this article with respect to the activity related to digital assets they develop, being exempt from the Tax on the Transfer of Movable Property and Rendering of Services, Income Tax, Municipal Tax or any other tax independent of their nature; for the purposes of the provisions of this paragraph, they shall also be exempt from the obligation to withhold such taxes in the event that this obligation exists;
d) In the case of legal entities, the tax benefits of letters b) and c) shall apply both to the entity and to the partners or shareholders individually considered, with respect to the profits or dividends derived from the activities detailed in the previous paragraphs;
e) The tax benefits established in the preceding paragraphs shall not apply when transactions of exchange of digital assets for goods or services that are not detailed in article 19 of this Law are carried out.
Chapter VI
Infringements and Sanctioning Regime
Sanctioning Procedure
Art. 37.- The procedure for the determination of infractions, their sanction and prescription shall be governed by the provisions of Title V of the Sanctioning Power of the Law on Administrative Procedures.
Infringements and Penalties
Art. 38.- Digital asset service providers, certifiers, and issuers of public offerings shall be subject to the following penalties for committing infractions as detailed below:
a) The following infractions shall be sanctioned with a fine of up to one hundred and fourteen minimum salaries of the commerce and services sector for each infraction:
1) For service providers and certifiers, failure to register in the respective registries;
2) For omitting the information, records, notices, data, explanations and extensions required by the National Commission of Digital Assets or its auditors or providing incomplete reports, including data related to public offerings of digital assets, without just cause;
3) For failure to comply with the standards of good conduct and ethics established by the National Commission of Digital Assets;
b) The following infractions shall be sanctioned with a fine to be determined between one hundred and fifteen minimum wages and three hundred and five minimum wages of the sector for each infraction:
1) Admit or trade on its digital platform digital assets without the due authorization of its issuance by the National Commission of Digital Assets;
2) Perform any of the actions set forth in the fifth subsection of Article 33, as well as the actions of Article 35 of this Law;
3) Refusing to comply with the resolutions issued by the National Commission of Digital Assets, in accordance with the procedures established therein Law and its regulations;
4) Refuse to provide information required by the Commission related to the issuance of public offerings of digital assets, digital asset services and users of digital platforms or applications, as applicable;
5) Providing wrong or erroneous information to the National Commission of Digital Assets without correcting it, upon being warned within the term established by the Commission;
If the fine is imposed as a consequence of the infraction committed is cancelled five working days after it becomes final, a surcharge of twenty percent of the total value of the fine imposed will be applied.
c) Issuers that fail to comply in a clear and material manner with the terms and conditions set forth in their Relevant Information Document will be sanctioned with a fine of between three hundred six to one thousand two hundred minimum wages of the commerce and services sector; if the fine is imposed as a consequence of the infraction committed is cancelled five working days after acquiring firm status, a surcharge of twenty percent of the total value of the fine imposed will be applied.
d) Issuers shall be sanctioned with a fine of up to one percent of the total value of the initial public offering for committing any of the following infractions:
1) Carrying out an issuance of digital assets without due qualification by the National Commission of Digital Assets;
2) Concealment of material and relevant information regarding a public offering. The Commission will consider the determination of a higher fine when the concealed information is related to the financial, commercial and technological risks of such offer.
e) In the case of certifiers, when a resolution is issued determining non-compliance with their responsibilities and the guidelines issued by the National Commission of Digital Assets through regulations, administrative resolutions and application guides, they will be sanctioned with the suspension of their functions for a period of forty-five calendar days. After said period, an internal hearing shall be held, conducted by the National Commission of Digital Assets, in which it shall be determined whether to permanently revoke its certifier status or to authorize it to continue in its functions.
The regulations of this Law shall establish the procedures for the suspension or cancellation of the quality of certifier and the holding of the hearing mentioned in the preceding paragraph.
Criteria for the establishment of fines
Art. 39.- The Commission shall impose the respective fines taking into account the following criteria:
a) The seriousness of the infraction;
b) The damage caused, either to the acquirers of the Digital Assets or to the integrity of the Digital Assets market;
c) The indications of intentionality;
d) The ability to pay and the effect of the sanction in repairing the damage to the harmed acquirers;
Mitigating and Aggravating Factors to the Penalties
Article 40.- The sanctions shall be mitigated by seventy-five percent when the offender remedies the non-compliances, omissions or inaccuracies in which the person has incurred, voluntarily, once the National Commission of Digital Assets has requested or summoned the person and he/she does so during the first five days of the term established by the Commission. In case it does it after the five days, but it is within the established term, no extenuating circumstance will be applied.
Penalties will be aggravated when there is repetition. This shall be understood as such when the same obligation is not complied with again, or when, having established the sanction, it is not remedied within the determined term. In this case, the applicable sanction will be increased by fifty percent and no mitigating circumstances will be applicable.
Purpose of the Funds
Art. 41.- The funds from the imposition of sanctions shall be paid into the General Fund of the State.
Chapter VII
Other Provisions
Electronic Signature
Art. 42.- The National Commission of Digital Assets shall accept the electronic signature, as long as it complies with the requirements established in the Electronic Signature Law, in all its administrative procedures and proceedings, including the presentation of documents and requests for information that the issuers, certifiers and service providers of Digital Assets make. Such electronic signature shall have the same validity and the same legal and evidentiary effects as a handwritten one.
General Regulations
Art. 43.- The President of the Republic shall approve the general regulations of this Law ninety days after its entry into force.
Provisional Registration of Service Providers
Art. 44.- The service providers of Digital Assets that are operating, prior to the entry into force of this Law, shall apply for their registration in the Register by complying with the requirements set forth in Articles 18 and 20 of this Law, within ten working days after the law enters into force. When applying for their registration, they may obtain a provisional registration which will be valid for six months.
If they do not submit their application within the term established above, they will not be able to continue their operations and must submit their application once the respective regulations enter into force, complying with all the requirements established by this Law and the Regulations.
Certification of the Relevant Information Document by the Commission
Art. 45.- As long as there are no entities accredited and registered as certifiers the National Commission of Digital Assets shall carry out the certification process of the Relevant Relevant Information Documents.
Prevalence
Art. 46.- The present law shall prevail by principle of specialty, over any other norm or legal provision that opposes or contradicts it in whole or in part.
Validity
Art. 47.- This Decree shall enter into force eight days after its publication in the Official Gazette.
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CERTIFICATE OF TRANSLATION
I, Jose Gustavo Ruano Anzueto, am competent to translate from Spanish into English, and certify that the translation of the Digital Assets Issuance Law is true and accurate to the best of my abilities
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Signature of Translator
JOSE GUSTAVO RUANO ANZUETO
Date: January, 12, 2023
DOY FE: que la firma que calza al pie del anterior escrito es AUTÉNTICA por haber sido puesto en mi presencia de su puño y letra por el señor JOSE GUSTAVO RUANO ANZUETO, de veintiséis años de edad, estudiante, del domicilio de la ciudad y departamento de San Salvador, a quien conozco, portador de su Documento Único de Identidad número cero cinco dos cero cuatro siete siete cuatro – nueve. En la cuidad de Antiguo Cuscatlán, departamento de La Libertad, a los doce días del mes de enero del año dos mil veintitrés.