Country overview

#20
El Salvador

Country stats

Rating Points
317
This indicator describes the overall rating of a given jurisdiction on several parameters according to cryptocurrency operations - market volume, crypto regulation, business climate, taxation framework.
Crypto Penetration
1.7%
Estimated percentage of crypto users out of the country's total population based on public data.
Legal Entities
83
Number of crypto companies registered in the country based on regulator data if available or other types of public data.
Regulation Points
180
An overall assessment of the granularity of crypto regulation in a given country. A high score is also given to countries where cryptocurrency transactions are highly regulated.
Amount of crypto users
107 100
Total amount of crypto users out of the country's total population based on public data.
Taxation points
40
This figure, according to our analysts' calculations, indicates the overall level of tax burden for cryptocurrency transactions in a given country. The higher the indicator, the lower the burden.
Market volume points
57.1
A rough estimate of this jurisdiction's retail crypto market relative to the rest of the world. The higher the indicator, the higher the market potential.
Status of crypto
Legally allowed
General status of cryptocurrency regulation in this jurisdiction.
Crypto payments
️Legal Tender
The legal status of cryptocurrency payments for goods and services in a given country based on information from regulators, public data and feedback from our community.
Security Level
High danger
The overall level of security in a given country based on open data.
Crypto Salaries
Legally allowed
The legal status of cryptocurrency salaries to employers in a given country based on information from regulators, public data and feedback from our community.
Business Climate
Good
Overall assessment of the friendliness of this country for crypto-business. This indicator takes into account the cost of obtaining a license and the attitude towards crypto entities in the country.
Stablecoin Regulation
Low
This indicator is evaluating the regulation of stablecoins in a given country. Complex regulation means that it is possible to issue steiblcoins and obtain a license for this activity. Basic regulation means that the issuance of stablecoins is possible, but not all legal aspects are defined in the law. Standard regulation means that there is a legal practice of steylcoin circulation in a given country.
Bad Factors
No
This section describes the unfavorable economic factors for crypto-business in a given country. These are countries that are under sanctions or on the FATF grey list and other factors.
Types of licenses
Crypto-to-crypto
This license type allows VASP to provide legal exchange from one cryptocurrency to another.
Crypto-to-fiat
This type of license regulates the exchange from cryptocurrency to fiat.
Wallet/Custody
This country has a legal licensing procedure for companies that store cryptocurrency - - crypto wallet providers and custodians.
Good
Medium
Bad
intro

El Salvador is famous for its Bitcoin Law and President Nayib Bukele. It’s the first country in the world that.

Security level

El Salvador has a high danger security level according to our rating. Jurisdiction has 37.9 points (from 100) for safety level in Numbeo crime rating (1). Homicide level (2) is 18.2 per 100,000 inhabitants a year. Story of firearm-related death (3) 78.52 per 100,000 inhabitants a year.

Crypto Payments

Bitcoin is the legal tender in Salvador according to the Bitcoin Law (4).

Likewise, art. 7 says: "every economic agent must accept bitcoin as a form of payment when it is offered by someone who acquires a good or service".

Last but not least - the US dollar is the main currency in the country.

Crypto Salaries

According to El Economista review (5), there is still a regulatory uncertainty for crypto salaries in Salvador. On the one hand, the labor code lets you pay wages in legal tender. On another hand Nayib Bukele claimed that paychecks should be delivered in national currency.

-Nayib Bukele responded with a tweet in which he mentioned that "salaries and pensions, by law, must be paid in dollars."
-The labor code establishes in its article 120 that: "The salary must be paid in legal tender." And the legal tender currencies in the country are the colon —although it is not in use—, the dollar and bitcoin, thanks to the Bitcoin Law.

-Likewise, article 7 of the Monetary Integration Law does not establish the obligation, but rather the possibility that dollars should be used to pay salaries, since it says: "Wages, salaries and fees may be denominated and paid in colones or dollars."

Quotes from EL Economista (auto-translation from Spanish)

Legal

The Bitcoin Law was approved (6) by a local parliament in August 2021. Salvador's legislation allows crypto operations and makes BTC a legal tender in the country. It also approves licensing and taxation procedures for crypto entities. Based on Zawya (7), “the new law paves the way for the acquisition of $1 billion in "crypto bonds" or "volcano bonds.”

However, there is still a need for precise regulation for some types of activity, and only VASP/ICO/Securities have a clear definition in the law. You can check a complete list of possible types of licensed entities in Salvador on official government website (8):

Digital Wallet for Bitcoin

Bitcoin Custodians

Digital Exchanges

Payment Processors

DECENTRALIZED DEFI, ICO, AND STO SERVICES

Others: STAKING, PAYMENT GATEWAY, LIQUIDITY PROVIDER, TOKEN ISSUANCE

Digital Exchange Houses or Exchanges

Others: CRYPTOMONEY INVESTMENT CONSULTANCY

Others: ASSET TOKENIZATION

Others: MINING, BTC INVESTMENT CONSULTANTS, LIQUIDITY PROVIDER

Other: BITCOIN INVESTMENT CONSULTANCY

Others: OTC PAYMENTS

Digital Trading Houses or Exchanges

List of licensed types of activity in Spanish

Billetera Digital para Bitcoin Custodios de Bitcoin Casas de Intercambio Digital o Exchanges Procesadores de Pago DESCENTRALIZADOS DEFI, SERVICIOS ICO Y STO Otros: STAKING, PASARELA DE PAGO, PROVEEDOR DE LIQUIDEZ, EMISION DE TOKENS Casas de Intercambio Digital o Exchanges Otros: ASESORIA DE INVERSIONES EN CRIPTOMONEDAS Otros: TOKENIZACION DE ACTIVOS Otros: MINERIA, CONSULTORES DE INVERSION DE BTC, PROVEEDOR DE LIQUIDEZ Otros: ASESORIA EN INVERSION DE BITCOIN Otros: PAGOS OTC Casas de Intercambio Digital o Exchanges

Federal Regulators in the country are the Central Reserve Bank and the Superintendency of the Financial System.

There are 95 licensed crypto companies (9) in Salvador, including Chivo, Qredo, Paxos Trust Company, Paxful, and OpenNode.

Taxation
Tax nameIndex
PIT tax Max30
PIT tax Min10
Corporate tax (CIT)30
Max Individual CGT (for crypto)30
Min Individual CGT (for crypto)0
Wealth tax Min0
Wealth tax Max0

El Salvador has a territorial taxation principle, which makes local income taxable. According to PWC, some types of foreign income, such as securities and financial operations, are still taxable for local citizens (10).

According to a government official, there is also no tax on crypto operations for foreigners in Salvador (11).

However, local citizens have a 10-30% PIT rate, 10-30% CGT rate, and 30% CIT rate. According to Deloitte Business (12), a lower CIT rate - 25%- is applied if annual income is lower than $150.000.

Also based on the Law for the Promotion of Innovation and Manufacture of Technology (13) approved in May 2023 includes:

Eliminating tariffs and taxes for 15 years. This will include the elimination of the income tax and any withholding on income tax, capital gains, municipal taxes on net company assets, customs duties, and transportation taxes, as well as the elimination of taxes on the importation of goods, inputs, machinery, equipment, and tools necessary for the new technology related investments.