El Salvador pioneers regulatory law for crypto to thrive

Crypto Regulation
El Salvador pioneers regulatory law for crypto to thrive

The Government of El Salvador has proposed the “Digital Asset Issuance Law” bill to establish a legal framework to provide legal certainty for the public issuance of digital assets.

El Salvador doubles down bet on cryptocurrencies.

In a Twitter thread today, Revista GatoEncerrado, An El Salvador independent journalism magazine, tweeted on the news of the government of El Salvador’s new “Digital Asset Issuance Law” bill. 

The tweet in Spanish and translated by google translate stated,

“#politicaSV| In correspondence of the @AsambleaSV there is an initiative of the Ministry of Economy, @MariaLuisaHayem to issue a ” Law on the Issuance of Digital Assets” to regulate the transfer operations to any title of digital assets.”

Under each thread was a picture of the document released on the official website of the National Assembly of El Salvador.

According to a document on the official website of the National Assembly of El Salvador, the law would regulate the transfer operations of any digital asset, seeking to “promote the efficient development of the digital asset market and protect the interests of acquirers.” Revista GatoEncerrado, giving a more detailed explanation of this document, stated 

The law will establish the creation of a “National Digital Asset Commission” that will verify the issuance of public offerings of digital assets. The commission will also be given the power to manage and update records of issuers, certifiers, service providers, and public offerings of digital assets. The commission also gets to authorize and cancel these records.

The law’s framework excludes transactions with CBDCs (as they are fiat currency regulated according to each country’s financial guidelines), assets not eligible for trading or exchange, assets with restricted transactions such as securities, and sovereign assets regulated by foreign laws.

The law’s novelty is that it separates crypto assets from all other assets and financial products, thus creating a first-ever customized regulatory framework for Crypto. 

El Salvador, the first country to declare Bitcoin as legal tender, is doubling down on its bet on cryptocurrencies even amid a bear market. 

New law benefits foreign countries more than El Salvador, Says critic

With this new law came expected criticism.  Mario Gomez, a Salvadoran hacktivist who is a strong critic of the way President Nayib Bukele implemented the Bitcoin Act, in a Twitter space analyzing the issue, claimed that the new law was created to benefit troubled foreign companies, seeking to increase the allure of El Salvador as a haven for the crypto industry.

The reason why these companies focus on small countries is because it is easier to sit directly with a president being a big company and implement measures that benefit (them),” 

Due to the hasty approval of President Bukele’s famous Bitcoin Law in Congress in June 2021, a bill approved in a few hours, it is likely this new law will come into force similarly hasty.