The Economy Commission of the Legislative Assembly already has in its possession the draft bill of the Law of Issuance of Digital Assets proposed by the Ministry of Economy of El Salvador. To this end, Torres Legal participated in a panel on Digital Assets, organized by the Bitcoin and Blockchain Cluster of El Salvador, where our managing partner, Héctor Torres, was one of the speakers along with lawyers and technology experts.

The Law aims to regulate the operations of digital assets used in the issuance of public offerings executed in Salvadoran territory, as well as regulate the requirements and obligations of issuers, service providers of digital assets and other participants operating in the process of public offerings.

Our expert brought to discussion that digital assets are not considered securities, and therefore, provisions related to them do not apply to them. Likewise, he adds that digital assets can be owned, exchanged, transferred, traded and promoted by natural and legal persons.

Torres brings to discussion the scenario where issues are made on assets that are located in El Salvador, but are traded abroad. In this case, the law does not mention this option.

Our lawyer explains that there are some localization criteria that, in stock exchange matters, have been regulated, but about assets that are located in Salvadoran territory and that would be tokenized for derivative or futures contracts, it is not mentioned in the Law of Issuance of Digital Assets.

“This law focuses on public issues, leaving aside the underlying assets within issues, but goes directly to protect those that are massively traded,”; Torres exposed to the audience that attended La Casa del Bitcoin. 

During the panel, the creation of the National Commission of Digital Assets was discussed, a unit attached to the Ministry of Economy that will be in charge of the application of the obligations described in the Law, its regulations and other rules for public offerings of digital assets.

The Commission will also 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 information to buyers.

Public offerings may be made by the State, the Ministry of Finance, the Central Reserve Bank, the Autonomous Regions, individuals and legal entities. Likewise, the offerings may be made with existing digital assets and building new ones such as tokens that offer a yield on a specific platform or creating original digital assets by the issuer.

The new regulation, if passed into law, would order the creation of a Bitcoin Fund Management Agency that will be responsible for the management, safeguarding and investment of funds from public offerings of digital assets carried out by the state of El Salvador and its autonomous institutions, as well as any yield from these offerings.

On the other hand, the draft bill would establish a Registry of Digital Asset Services where those persons whose business is the exchange of digital assets for fiat money or other digital assets; operate an exchange or trading platform; or place digital assets in platforms or digital wallets may register.

Natural persons may register by using their identity document and indicating their place of domicile in El Salvador. While legal entities that are foreigners and are domiciled in another country must form a corporation or branch, domiciled in El Salvador and duly registered.

Torres Legal is constantly monitoring the laws passed by the Legislative Body of El Salvador. If you wish to obtain further advice on the study and approval of the Law of Issuance of Digital Assets, please do not hesitate to contact us.

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