Obtaining a Crypto Licence in El Salvador: Cost, Process & Requirements

As the first country in the world to embrace Bitcoin as legal tender, El Salvador has quickly become a key player in the cryptocurrency landscape. This bold move has paved the way for businesses within the cryptocurrency industry to expand into the Latin American market, taking advantage of the country’s innovative regulatory environment. For those looking to operate a cryptocurrency-related business in El Salvador, obtaining a crypto license in El Salvador is an essential step. At SBSB Fintech Lawyers, we specialize in guiding clients through the process of acquiring a crypto license in El Salvador and ensuring full compliance with the regulations in place. In this comprehensive guide, we will cover everything you need to know about the crypto license in El Salvador, including its costs, process, requirements, and benefits.

Why Choose El Salvador for Your Crypto Business?

El Salvador’s decision to officially recognize Bitcoin as legal tender in 2021 marked a turning point for the cryptocurrency industry. This landmark move not only demonstrates the government’s commitment to embracing digital assets but also provides a clear regulatory framework for cryptocurrency businesses. By establishing a crypto license in El Salvador, companies can tap into the rapidly growing digital asset market while benefiting from the country’s unique regulatory advantages.

El Salvador’s Digital Assets Law (Ley de Emisión de Activos Digitales), introduced in 2022, outlines the legal requirements for businesses operating within the crypto industry. With this framework in place, El Salvador offers businesses the opportunity to operate in a regulated, transparent, and forward-thinking environment. By obtaining a crypto license in El Salvador, your company will be able to legally offer a wide range of services, including digital asset exchange, wallet services, payment processing, and more.

Process of Obtaining a Crypto License in El Salvador

Obtaining a crypto license in El Salvador requires a multi-step process that involves careful preparation, submission of documents, and compliance with local regulations. Below is a step-by-step guide to the process of obtaining a crypto license in El Salvador.

Stage 1: Collection of Preliminary Documents (2 Weeks)

The first stage of obtaining a crypto license in El Salvador involves gathering all the necessary documents. The key documents required for this stage include:

• Preferred Company Name: You will need to choose and reserve a name for your company with the Commercial Registry of El Salvador.
• Passport Copies: Copies of passports for all shareholders (at least two) and directors of the company. These documents must be notarized and apostilled.
• Address Confirmation: A utility bill or other official document that confirms the residential address of each shareholder and director.
• Power of Attorney: A notarized and apostilled power of attorney.
• Business Model: A brief description of your company’s business model, typically 1-2 pages outlining the type of services you will offer.

Stage 2: Registration and Licensing Process (2.5 – 5 Months)

Once the preliminary documents are ready, the next step is to officially register your company and apply for the crypto license in El Salvador. The process for registration includes:

1. Company Registration: The company must be registered with the Commercial Registry of El Salvador. This includes the submission of all notarized documents, including proof of identity and residency of directors and shareholders.

2. Preparation of Corporate Documents: You will need to prepare the necessary corporate documents, including the Articles of Incorporation and any other documents required by the local authorities.

3. License Application: After the company registration is complete, you will submit your application for a crypto license in El Salvador to the National Commission for Digital Assets (NCDA). The NCDA is the regulatory authority responsible for reviewing and issuing licenses to digital asset service providers (DASPs).

Stage 3: Corporate Account Opening (4–6 Weeks)

While the registration and licensing process is ongoing, it is advisable to begin the process of opening a corporate bank account. This can take between 4 to 6 weeks, depending on the bank and the type of account you require. Key steps in this process include:

• Choosing a Suitable Bank/EMI: El Salvador has several banks that are crypto-friendly and we also can find banks and payment institutions outside the country. It is essential to compare the risk appetite of the bank with the risk profile of your business, based on your AML and KYC policies.
• Document Collection: You will need to collect various documents to open the corporate account, including proof of funds, source of wealth, purpose of account opening, and more.
• Account Opening: The bank will process your application and provide you with a corporate account. This step can often be done remotely or through a representative, making it easier for international businesses to establish themselves in El Salvador.

Stage 4: Additional Registration with Public Authorities (2 Weeks)

After the registration and account opening processes are complete, you will need to register your company with the relevant public authorities in El Salvador. This includes registering with:

• The Ministry of Finance (Hacienda): You must register with the Ministry of Finance to obtain your Taxpayer Identification Number (NIT).
• Social Security Institute: This is necessary for companies with employees.
• Ministry of Labor: You must also comply with labor regulations and register with the Ministry of Labor.

Stage 5: Obtaining the Crypto License

Once your company has been fully registered and all documentation is in order, you can proceed to obtain the crypto license in El Salvador. This involves:

• Bitcoin License (RPSBTC): If your company provides services related to Bitcoin, you will need to register as a Bitcoin Service Provider with the Central Reserve Bank of El Salvador. This step ensures that your company complies with the Bitcoin Law and the regulatory oversight of the Financial System Authority (SSF) and the Financial Intelligence Unit (FIU).
• DASP License (RPSAD): Under the Digital Asset Issuance Act, service providers, asset issuers, and certifying entities must be registered with the National Commission for Digital Assets (NCDA). If you intend to offer digital asset services in El Salvador, you will need to be registered under the DASP license.

Crypto License in El Salvador Costs

The costs associated with obtaining a crypto license in El Salvador are relatively low compared to other jurisdictions. However, it is essential to understand the various fees involved:

• State Fee for Application: There is no state fee for submitting the application for the crypto license in El Salvador.
• Required Share Capital: The minimum required share capital for a crypto company is $2,000 USD. This must be paid as part of the company registration process.
• Annual Supervision Fee: There is no annual supervision fee for companies with a crypto license in El Salvador.
• Bank Account Opening Fees: There may be fees associated with opening a corporate bank account, depending on the bank chosen.
• Additional Fees: While there are no significant ongoing fees for crypto companies, there may be costs related to compliance, legal services, and audit requirements.

Key Requirements for a Crypto License in El Salvador

In addition to the document submission and registration processes, companies must meet the following requirements to obtain a crypto license in El Salvador:

• Legal Entity Registration: Your company must be a legally registered entity in El Salvador.
• Shareholder and Director Documentation: At least two shareholders are required, and all directors and shareholders must provide identification and residency verification.
• AML/KYC Compliance: Companies must implement Anti-Money Laundering (AML) and Know-Your-Customer (KYC) policies to prevent financial crimes.
• Cybersecurity Standards: Companies must adhere to strict cybersecurity standards for the storage and handling of digital assets.
• Financial Reporting: Companies must maintain financial records and disclose information about their operations, ownership, and shareholder structure.

Benefits of a Crypto License in El Salvador

• Regulatory Clarity: With the crypto license in El Salvador, businesses can operate in a clear and regulated environment, ensuring compliance with national laws and regulations.
• Tax Advantages: El Salvador offers favorable tax policies for crypto-related activities, including exemptions from capital gains tax, income tax, and other fees.
• Access to a Crypto-Friendly Market: With Bitcoin recognized as legal tender, El Salvador is an attractive destination for crypto companies looking to expand into Latin America.
• Collaborations with Government Initiatives: By obtaining a crypto license in El Salvador, businesses can align with government initiatives to promote digital payments and blockchain technology.

Conclusion

El Salvador presents an excellent opportunity for businesses seeking to operate in the cryptocurrency space. With its forward-thinking regulatory framework, crypto license in El Salvador enables companies to legally provide digital asset services while benefiting from tax advantages and a supportive environment for innovation. The process of obtaining a crypto license in El Salvador is straightforward and involves registering a legal entity, submitting documents, and complying with regulatory requirements. The cost of a crypto license in El Salvador is relatively low, making it an attractive option for businesses looking to enter the Latin American market.

At SBSB Fintech Lawyers, we specialize in assisting clients with the process of obtaining a crypto license in El Salvador. Our experienced team will guide you through every step, ensuring compliance with local laws and regulations. If you are interested in obtaining a crypto license in El Salvador, contact us today to discuss how we can help you establish your crypto business in this rapidly growing market.