El Salvador

**Banco Central de Reserva (BCR) de El Salvador:** (Central Reserve Bank of El Salvador)

**Role:** As the central bank, it oversees monetary policy, financial stability, and payment systems. It plays a key role in regulating financial institutions' interactions with legal tender Bitcoin and issues norms for its use in the financial system.

**Superintendencia del Sistema Financiero (SSF):** (Superintendence of the Financial System)

**Role:** The SSF regulates and supervises financial institutions, including banks, credit unions, and other financial service providers. Its oversight extends to how these entities handle Bitcoin and other digital assets, ensuring compliance with financial regulations, anti-money laundering (AML), and combating the financing of terrorism (CFT) requirements.

**Comisión Nacional de Activos Digitales (CNAD):** (National Commission of Digital Assets)

**Role:** Established by the Digital Assets Issuance Law, CNAD is a specialized body responsible for regulating the *issuance, public offering, and transfer* of digital assets (excluding Bitcoin as legal tender). This includes overseeing tokenized securities and ensuring investor protection in the digital asset market.

**Date:** Enacted June 8, 2021; effective September 7, 2021.

Established Bitcoin as legal tender alongside the US Dollar.

Mandates that all economic agents accept Bitcoin as payment for goods and services (with exceptions for those unable to access the technology).

Allows for the payment of taxes in Bitcoin.

Exempts capital gains from Bitcoin from taxation.

Promotes the use of the Chivo Wallet, a government-backed digital wallet.

**Reference:** *Decreto Legislativo No. 57, de fecha 8 de junio de 2021*.

**URL (Spanish - generally found on official government or legislative archives):** While a direct English translation on a government site is rare, the original decree can be found in the *Diario Oficial* (Official Gazette). For example, a reputable legal resource often hosts it: https://leyes.io/bitcoin-law (Note: This is a legal information site, not the official government gazette, but provides the law text).

**Ley de Emisión de Activos Digitales (Digital Assets Issuance Law)**

**Date:** Passed January 10, 2023; effective shortly after publication.

Establishes a comprehensive legal framework for the *issuance, public offering, and transfer* of digital assets (excluding Bitcoin, which is legal tender).

Creates the National Commission of Digital Assets (CNAD) as the primary regulator for these activities.

Aims to facilitate the issuance of tokenized bonds (e.g., the "Volcano Bonds") and other digital securities, providing investor protection and market integrity.

Defines various types of digital assets and their regulatory treatment.

**Reference:** *Decreto Legislativo No. 637, de fecha 10 de enero de 2023*.

**URL (Spanish):** Similar to the Bitcoin Law, the official text is in the *Diario Oficial*. A legal resource: https://leyes.io/ley-de-emision-de-activos-digitales

**Fully Legal and Encouraged:** Trading Bitcoin is entirely legal and explicitly sanctioned by the Bitcoin Law. Individuals and businesses can freely buy, sell, and use Bitcoin for transactions.

**Tax Exemptions:** Capital gains from Bitcoin are exempt from taxation, making it highly attractive for investment and trading.

**Exchanges:** Bitcoin exchanges operating in El Salvador are permitted and integrated into the financial system. They are subject to oversight by the **SSF** and **BCR**, particularly concerning AML/CFT compliance, consumer protection, and operational stability. The government-backed Chivo Wallet also facilitates Bitcoin trading and conversion.

**Permitted, but Not Legal Tender:** While not granted legal tender status like Bitcoin, the trading and holding of other cryptocurrencies (altcoins) are generally *not prohibited*.

**Regulatory Framework for Issuance:** The *Ley de Emisión de Activos Digitales* primarily focuses on regulating the *issuance* of these other digital assets, particularly those classified as securities.

**Exchanges for Altcoins:** Exchanges that facilitate trading of non-Bitcoin cryptocurrencies operate within El Salvador. These platforms are expected to comply with general financial regulations, including robust AML/CFT measures overseen by the **SSF**. The **CNAD** would primarily regulate the *issuance* and *primary market activities* of digital assets that fall under its purview, rather than the secondary trading of already existing altcoins not issued in El Salvador. However, any local platform that *lists* these assets for trading would still be under SSF scrutiny regarding financial crime.

**Note:** As a newly established entity under the 2023 law, its independent website or full operational details might still be developing, but its mandate is clear. Information is often found on the Ministry of Economy or other related government sites.

**Ley Contra el Lavado de Dinero y de Activos (LCLDA)**

**English Title:** Law Against Money Laundering and Asset Forfeiture

**Purpose:** This is the foundational AML/CFT law in El Salvador, applicable to a wide range of obliged entities. VASPs fall under its scope, requiring them to implement robust AML/CFT programs.

**Key Aspects:** Defines money laundering and asset forfeiture offenses, establishes reporting obligations, and sets penalties.

**Purpose:** Made Bitcoin legal tender in El Salvador. While primarily focused on the legal tender status and its integration into the economy, it implicitly brought entities dealing with Bitcoin into the regulatory fold of existing financial laws, including AML.

**Ley de Regulación de los Proveedores de Servicios de Activos Virtuales (LRPVAS)**

**English Title:** Law for the Regulation of Virtual Asset Service Providers

**Purpose:** This is the most specific and comprehensive law directly addressing VASPs. It establishes a licensing regime for VASPs and explicitly lays out their AML/CFT obligations, consumer protection measures, and prudential requirements. It covers services such as virtual asset exchange, transfer, custody, and participation in financial services related to virtual asset issuance.

**Normas para la Prevención del Lavado de Dinero y Activos y del Financiamiento del Terrorismo (NPLDFT)**

**English Title:** Norms for the Prevention of Money Laundering and Asset Forfeiture and the Financing of Terrorism

**Issued by:** Superintendencia del Sistema Financiero (SSF)

**Purpose:** These norms provide detailed requirements for supervised entities (including those handling virtual assets under the SSF's purview) regarding the implementation of AML/CFT policies, procedures, and controls.

**Natural Persons:** Obtain and verify identity using reliable independent source documents (e.g., valid national identity card, passport). This includes full name, date of birth, nationality, address, and unique identification number.

**Legal Entities:** Obtain and verify legal name, legal form, address, proof of incorporation, articles of association, names of directors and beneficial owners, and authorized signatories.

**Beneficial Ownership:** Identify and verify the identity of beneficial owners (individuals who ultimately own or control 25% or more of the entity) for legal entities.

**Purpose and Nature of the Relationship:** Understand the purpose and intended nature of the business relationship or occasional transaction. This includes understanding the source of funds or wealth, especially for high-value transactions.

Regularly review the customer relationship to ensure that transactions are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Keep customer information up-to-date, especially for high-risk customers.

Monitor for changes in beneficial ownership or customer risk profile.

VASPs must classify customers based on their AML/CFT risk (low, medium, high) and apply enhanced due diligence (EDD) measures for higher-risk customers.

EDD measures may include obtaining additional identifying information, requiring more frequent updates, verifying the source of funds/wealth, and obtaining senior management approval for the relationship.

Politically Exposed Persons (PEPs) are always considered high-risk and require EDD, including senior management approval and establishing the source of wealth/funds.

**Obligation to Report:** VASPs are legally obliged to report any suspicious transactions or activities to the Financial Intelligence Unit (UIF) without delay, regardless of the amount.

**Definition of Suspicion:** Suspicion refers to a belief or doubt that funds or assets are proceeds of criminal activity or are linked to the financing of terrorism. This includes transactions that are unusual, complex, abnormally large, or have no apparent economic or lawful purpose.

**No Tipping-Off:** VASPs and their employees are prohibited from informing the customer or any third party that a STR has been or will be made.

**Customer Due Diligence Records:** All documents and information obtained during the CDD process (identification, verification, beneficial ownership, purpose of relationship).

**Transaction Records:** Detailed records of all virtual asset transactions, including transaction date, type, amount, parties involved (originator and beneficiary information), and virtual asset addresses.

**STRs:** Copies of all suspicious transaction reports filed with the UIF.

**Duration:** Records must typically be maintained for a minimum of **five (5) years** from the date of the last transaction or the end of the business relationship, whichever is later.

**Superintendencia del Sistema Financiero (SSF)**

**English Title:** Superintendency of the Financial System

**Role:** The SSF is the main regulator responsible for licensing, supervising, and monitoring VASPs for compliance with the LRPVAS and general financial regulations, including AML/CFT.

**Unidad de Investigación Financiera (UIF) / Fiscalía General de la República**

**English Title:** Financial Investigation Unit / Attorney General's Office

**Role:** The UIF, operating under the Attorney General's Office, is the Financial Intelligence Unit (FIU) of El Salvador. It is responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) to relevant law enforcement agencies for investigation.

**Banco Central de Reserva (BCR)**

**English Title:** Central Reserve Bank

**Role:** While the SSF primarily supervises licensed VASPs under the new law, the BCR has historically been involved in regulating payment systems and certain aspects related to the adoption of Bitcoin, including the issuance of technical norms. Its role might be more focused on monetary policy and payment system stability, while the SSF handles VASP specific licensing and prudential supervision.

**United Nations (UN) Sanctions:** Binding on all UN member states, including El Salvador.

**Office of Foreign Assets Control (OFAC - U.S. Treasury Department) Sanctions:** Critical due to the global reach of the U.S. financial system and the U.S. dollar, and OFAC's extraterritorial jurisdiction.

**European Union (EU) Sanctions:** Applicable to EU persons and entities, but with global implications for financial flows.

**Financial Action Task Force (FATF) Recommendations:** While not a sanctions body, FATF sets the international standards for AML/CFT, which El Salvador is expected to implement. These recommendations explicitly address VASPs and include obligations for sanctions screening.

**Risk-Based Approach:** Assessing the specific sanctions risks associated with their customer base, products, services, geographic locations, and transaction types.

**Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD):** Collecting and verifying identity information for all customers, including beneficial owners, to understand their risk profile. This forms the basis for effective sanctions screening.

**Real-time Screening:** Screening all new customers, counterparties, and transactions against relevant sanctions lists *before* commencing any relationship or facilitating a transaction.

**Ongoing Monitoring:** Regularly re-screening existing customer bases against updated sanctions lists.

**Beneficial Ownership:** Screening all individuals and entities involved in a transaction, including intermediaries and ultimate beneficial owners, not just direct customers.

**PEP Screening:** Screening for Politically Exposed Persons (PEPs) often goes hand-in-hand with sanctions screening, as PEPs can present higher corruption and money laundering risks.

**Geographic Restrictions:** Identifying and blocking transactions to/from comprehensively sanctioned jurisdictions (e.g., Iran, North Korea, Cuba, Syria, specific regions of Ukraine/Russia) or involving individuals/entities located in or associated with such areas.

**Transaction Monitoring:** Implementing systems to detect suspicious patterns or red flags that may indicate sanctions evasion.

**Reporting:** Freezing funds and assets of sanctioned individuals/entities and reporting blocked transactions and suspicious activities to the relevant authorities (e.g., El Salvador's Financial Intelligence Unit – FIU, known as Unidad de Investigación Financiera - UIF).

**Record-Keeping:** Maintaining accurate and comprehensive records of all transactions, CDD information, screening results, and compliance decisions.

**OFAC Sanctions Compliance Guidance for the Virtual Currency Industry:** Emphasizes that U.S. sanctions apply to virtual currency activities in the same manner as they apply to traditional financial activities. It details expectations for compliance programs, including sanctions screening, risk assessment, and reporting.

**OFAC's Specially Designated Nationals and Blocked Persons (SDN) List:** This is the most critical U.S. sanctions list.

**OFAC's Consolidated Sanctions List:** Includes the SDN List and other non-SDN lists (e.g., Sectoral Sanctions Identifications List).

**EU Consolidated List of Persons, Groups and Entities subject to EU Financial Sanctions:**

**URL (unofficial but comprehensive map):** https://www.sanctionsmap.eu/

**Official Journal (search for latest consolidated list):** https://eur-lex.europa.eu/homepage.html

**UN Security Council Consolidated List:** Includes individuals and entities associated with Al-Qaida, ISIL (Da'esh), and the Taliban, as well as those subject to other UN sanctions regimes.

**Iran:** (U.S., UN, EU sanctions)

**North Korea (DPRK):** (U.S., UN, EU sanctions)

**Crimea, Donetsk, Luhansk, Kherson, Zaporizhzhia regions of Ukraine:** (U.S., EU, UK sanctions due to Russian occupation)

**Venezuela:** (Specific individuals/entities under U.S., EU sanctions)

**Civil Penalties:** Can range from thousands to millions of dollars per violation, depending on the program and severity.

**Criminal Penalties:** For willful violations, individuals can face significant prison sentences (e.g., up to 20 years) and substantial fines (e.g., up to $1 million), while corporations can face multi-million dollar fines.

**Reputational Damage:** Significant negative impact on a company's reputation and ability to operate globally.

**EU Penalties:** Vary by member state, but generally include substantial fines and potential imprisonment for individuals.

**UN Penalties:** While the UN itself doesn't impose penalties directly on individuals/entities, member states are obligated to implement the sanctions into their national law and enforce them, leading to national penalties.

**Ley Contra el Lavado de Dinero y de Activos (Law Against Money Laundering and Asset Forfeiture):**

**Example (search for updated versions):** A general search for "Ley Contra el Lavado de Dinero y de Activos El Salvador" will yield many legal aggregator sites. It's crucial for legal professionals to consult the most current version.

This law, and its implementing regulations (Normas Técnicas), mandate financial institutions (which VASPs are increasingly considered) to implement AML/CFT measures, including due diligence and reporting suspicious transactions. Failure to comply can lead to:

**Administrative Fines:** Imposed by the Superintendencia del Sistema Financiero (SSF) for non-compliance with regulations.

**Suspension or Revocation of Licenses:** For serious or repeated non-compliance.

**Criminal Charges:** For individuals or directors involved in money laundering, terrorist financing, or serious facilitation of such activities, which includes willful violations of sanctions. Penalties can include imprisonment.

To implement and enforce the sanctions regimes mandated by **UN Security Council Resolutions**, which are binding on all member states.

To adhere to the **FATF Recommendations**, which include implementing robust AML/CFT frameworks that require financial institutions (including VASPs) to screen against relevant sanctions lists. El Salvador is part of GAFILAT (Grupo de Acción Financiera de Latinoamérica), a FATF-style regional body.

To cooperate with international partners (like the U.S. and EU) in enforcing their respective sanctions, especially where there is a nexus (e.g., U.S. persons, U.S. dollar transactions).

**Superintendencia del Sistema Financiero (SSF):** The primary financial regulator responsible for overseeing banks and other financial institutions. They are developing and enforcing specific regulations for VASPs under the broader AML/CFT framework.

**Unidad de Investigación Financiera (UIF) – Financial Intelligence Unit:** Receives Suspicious Activity Reports (SARs/STRs) and is responsible for investigating financial crimes, including money laundering and terrorist financing.

Part of the Fiscalia General de la República (Attorney General's Office).

**Reglamento para la Aplicación de las Disposiciones de Prevención del Lavado de Dinero y Activos y Financiamiento del Terrorismo para Proveedores de Servicios de Activos Digitales** (Regulation for the Application of Provisions for the Prevention of Money and Asset Laundering and Terrorism Financing for Digital Asset Service Providers). This regulation was issued by the **Comisión Nacional de Activos Digitales (CNAD)**, El Salvador's National Commission of Digital Assets.

VASPs are required to transmit originator and beneficiary information for transactions **equal to or exceeding $1,000 USD**, or its equivalent in any digital asset.

Exchange between digital assets and fiat currency.

Exchange between one or more forms of digital assets.

Safeguarding and/or administration of digital assets or instruments enabling control over digital assets.

Participation in and provision of financial services related to an issuer's offer and/or sale of a digital asset.

Account number or unique transaction identifier

Physical address (or national identification number, or customer identification number, or date and place of birth, as applicable)

**Ley Bitcoin (Bitcoin Law):** Article 14 of the Bitcoin Law outlines sanctions for non-compliance with its provisions and related regulations. These can range from warnings to fines.

**Ley Contra el Lavado de Dinero y de Activos (Anti-Money Laundering and Asset Law):** This overarching AML/CFT law in El Salvador also provides for sanctions for financial institutions and designated non-financial businesses and professions (DNFBPs) that fail to comply with their AML/CFT obligations. Penalties can include substantial fines, suspension or revocation of licenses, and even criminal prosecution for severe violations.

Official Publication in Diario Oficial No. 222, Tomo No. 437, November 21, 2022.

A copy of the regulation can often be found on the CNAD's official website or legal repositories. For instance, the CNAD's site typically announces such regulations: https://cnad.gob.sv/ (Navigate to "Normativa" or "Publicaciones").

A direct link to the regulation document (PDF) is often provided by the CNAD. As of a recent check, it's typically under the "Marco Normativo" or "Regulaciones" section.

**Direct PDF Link (Example, confirm current):** CNAD Normativa

Diario Oficial No. 110, Tomo No. 431, June 8, 2021.

Often available on the official legislative website of El Salvador or via legal databases.

*Unofficial English translation available on many crypto news sites.*

Diario Oficial No. 228, Tomo No. 373, December 10, 2006 (with subsequent reforms).

Accessible via the official legislative website of El Salvador.

**Ley Bitcoin (Bitcoin Law) - Enacted September 7, 2021:**

This law made Bitcoin legal tender in El Salvador. While it mandates businesses to accept Bitcoin, it does not extensively regulate third-party digital asset custody providers. Its focus is more on the adoption and use of Bitcoin within the national economy.

**Reference:** Ley Bitcoin (Official Text - Spanish) (Page 13, Decreto No. 57)

**Ley de Emisión de Activos Digitales (Digital Assets Issuance Law) - Enacted January 10, 2023:**

This is the cornerstone for regulating digital asset issuance, trading, and services, including custody. It creates the legal framework for the issuance of digital assets by the state and private entities, and for the operation of Digital Asset Service Providers (PSAD).

**Reference:** Ley de Emisión de Activos Digitales (Official Text - Spanish)

**Who:** Any entity intending to provide "custody services" for digital assets to third parties must be licensed as a **Digital Asset Service Provider (Proveedor de Servicios de Activos Digitales - PSAD)**.

**Regulator:** The **CNAD** is responsible for granting, denying, suspending, and revoking these licenses.

**Requirements:** Applicants must meet several criteria, including:

Legal constitution in El Salvador.

Minimum capital requirements (to be defined by CNAD norms).

Robust governance, risk management, and internal control systems.

Fit and proper requirements for directors and management.

Adherence to anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations.

**Digital Assets Issuance Law, Article 12:** States that "Digital Asset Service Providers may offer, among others, the following services: ... b) Custody services of Digital Assets owned by third parties."

**Digital Assets Issuance Law, Article 13:** Mandates that "Any person who intends to provide Digital Asset Services must obtain a license issued by the CNAD."

**Digital Assets Issuance Law, Articles 14-17:** Detail the application process, requirements for applicants, and powers of the CNAD in licensing.

**Mandate:** Digital Asset Service Providers offering custody services are explicitly required to keep client assets separate from their own proprietary assets.

**Digital Assets Issuance Law, Article 20, Paragraph 2:** "Those who provide custody services for digital assets belonging to third parties shall adopt adequate technical and organizational measures to safeguard the digital assets held on behalf of their clients and shall ensure that they are kept **separated and clearly identified from their own assets**."

**Digital Assets Issuance Law, Article 21:** Establishes a fiduciary duty for custodians, requiring them to act in the best interest of their clients and to safeguard their digital assets "with the diligence of a good merchant."

**Mandate:** Custodians are required to establish mechanisms to protect client assets against various risks.

**Digital Assets Issuance Law, Article 22:** "Digital Asset Service Providers must implement mechanisms for **financial guarantee or insurance funds**, for the benefit of their clients, to cover potential losses or damages derived from their operations, including those related to the custody of Digital Assets."

**Details:** The specific amounts, types of guarantees, and conditions for these insurance or guarantee funds are expected to be elaborated in subsequent technical norms (Normas Técnicas) issued by the CNAD.

**Interpretation:** While the law does not explicitly use the term "cold storage," the mandate for "adequate technical and organizational measures" and "protection of private keys" strongly implies the use of highly secure storage solutions. Industry best practices widely recognize cold storage as a critical component for secure digital asset custody, especially for a significant portion of client assets. Detailed technical requirements are likely to be specified in the CNAD's forthcoming norms.

**Definition:** In El Salvador, a "qualified custodian" for digital assets is essentially a **Digital Asset Service Provider (PSAD)** that has obtained the necessary license from the **CNAD** to offer custody services.

**Digital Assets Issuance Law, Article 12:** Categorizes "custody services" as one of the services offered by PSADs.

**Digital Assets Issuance Law, Article 13:** Establishes that only licensed entities can provide these services.

**Qualifications:** The qualification comes from the rigorous licensing process, which evaluates the applicant's financial stability, technological infrastructure, security protocols, governance, and compliance with AML/CFT regulations.

**CNAD Normas Técnicas:** The Digital Assets Issuance Law frequently references the need for the **CNAD to issue "Normas Técnicas" (Technical Norms or Regulations)**. These norms will provide the granular detail and specific operational requirements for all aspects of the law, including custody.

**Areas to be covered by Normas Técnicas:**

Minimum capital requirements for PSADs.

Specific security requirements for the safeguarding of digital assets and private keys (which would likely include detailed cold/hot storage configurations).

Detailed requirements for governance, internal controls, risk management, and cybersecurity.

Specifics regarding the financial guarantee/insurance funds (amounts, types, conditions).

Reporting obligations for licensed entities.

Detailed AML/CFT procedures specific to digital asset service providers.

**Status:** As of the knowledge cutoff, many of these detailed norms are still in the process of being developed or are newly emerging. The Digital Assets Issuance Law provides the high-level framework, but the practical implementation details are largely left to these upcoming CNAD regulations.

**Comisión Nacional de Activos Digitales (CNAD) - National Commission of Digital Assets:**

**Role:** Created by the Digital Assets Issuance Law (Ley de Emisión de Activos Digitales), enacted in January 2023. CNAD is the primary regulator for the issuance, offering, and trading of digital assets (excluding Bitcoin, which is governed by the Bitcoin Law as legal tender). It grants licenses to Digital Asset Service Providers (DASPs).

**Enforcement Focus:** Primarily focused on ensuring compliance with the Digital Assets Issuance Law, licensing requirements, and investor protection for new issuances and service providers. Non-compliance with these new laws would likely be the basis for future enforcement.

**Superintendencia del Sistema Financiero (SSF) - Superintendency of the Financial System:**

**Role:** Regulates traditional financial institutions. While Bitcoin is legal tender, the SSF's direct oversight of crypto firms is limited unless they are also traditional financial entities or deal with fiat in specific regulated ways. It ensures financial stability and consumer protection within the traditional system.

**Banco Central de Reserva de El Salvador (BCR) - Central Reserve Bank of El Salvador:**

**Role:** Oversees monetary policy, financial stability, and payment systems. While Bitcoin is legal tender, the BCR does not directly regulate crypto firms but rather manages the implications of Bitcoin adoption on the broader economy.

**Fiscalía General de la República (FGR) - Attorney General's Office:**

**Role:** Handles criminal investigations, including fraud, money laundering, and other illicit activities that might involve cryptocurrencies. Any criminal misuse of crypto would fall under their jurisdiction.

**Pro-Bitcoin Stance:** El Salvador's government has been a proponent of Bitcoin adoption, aiming to attract investment and innovation in the crypto space. This has meant less of a "crackdown" mentality and more of a "build the framework" approach.

**New Laws, New Regulation:** The most significant development is the *creation* of the Digital Assets Issuance Law and the CNAD in early 2023. This law establishes licensing requirements for digital asset service providers. Enforcement will primarily occur as the CNAD begins to fully implement its mandate, licenses entities, and addresses non-compliance with these *new* rules.

**Focus on State-Sponsored Initiatives:** Much of the scrutiny and "enforcement" (in terms of ensuring compliance or addressing issues) has internally revolved around state-sponsored initiatives like the **Chivo Wallet** and the **Volcano Bonds**. These are not "enforcement actions" against private entities, but rather regulatory/operational challenges for the state itself.

**Chivo Wallet Issues & Internal Controls:**

**Regulator:** Government of El Salvador (operating the Chivo wallet, thus acting as an internal regulator/oversight body).

**Entity Targeted:** The Chivo Wallet system itself (state-owned).

**Violation Type:** User complaints regarding fraud, identity theft, unauthorized transactions, and technical glitches related to the initial rollout and subsequent operation of the Chivo wallet. These were widely reported, especially in 2021-2022. While not an *enforcement action* against a private company, the government had to address these issues, which led to system improvements and enhanced security measures.

**Penalty Amount:** N/A (Internal operational costs, reputation damage, potentially user reimbursements).

**Date:** Ongoing since the September 2021 launch, particularly prominent in late 2021 and early 2022.

**Outcome:** The government implemented fixes, offered customer support, and improved security. This highlights a self-correction mechanism rather than external regulatory enforcement.

Reuters on Chivo Glitches: https://www.reuters.com/markets/currencies/salvadorans-complain-bitcoin-app-faults-after-adoption-2021-09-08/

Human Rights Foundation on Chivo issues: https://hrf.org/the-many-problems-of-el-salvadors-bitcoin-experiment/

**Digital Assets Issuance Law & CNAD Licensing:**

**Regulator:** Comisión Nacional de Activos Digitales (CNAD).

**Entity Targeted:** Digital Asset Service Providers (DASPs) operating or wishing to operate in El Salvador.

**Violation Type:** Non-compliance with licensing requirements, investor protection rules, and other provisions of the Digital Assets Issuance Law.

**Penalty Amount:** Not yet publicly reported for specific cases, but the law provides for fines, suspension, or revocation of licenses.

**Date:** Law enacted January 2023, CNAD operational since then. Future enforcement actions will stem from this.

**Outcome:** The CNAD is now the authority for licensing and supervising new digital asset issuances and providers. Any "enforcement" in the future will likely be against entities that fail to secure or maintain these licenses, or violate investor protection rules.

Official CNAD Website: https://cnad.gob.sv/ (Spanish)

Digital Assets Issuance Law (Ley de Emisión de Activos Digitales) - PDF available via government sites (e.g., Asamblea Legislativa): https://www.asamblea.gob.sv/sites/default/files/documents/decretos/1673898622_DECRETO%20572.pdf

**International Monetary Fund (IMF) Warnings on AML/CFT:**

**Regulator:** International Monetary Fund (IMF) – not an El Salvadoran regulator, but provides international pressure.

**Entity Targeted:** Government of El Salvador (for its overall regulatory framework).

**Violation Type:** Concerns about potential risks to financial integrity and stability, particularly regarding anti-money laundering (AML) and combating the financing of terrorism (CFT) due to the widespread adoption of Bitcoin without a fully mature regulatory framework.

**Penalty Amount:** N/A (Reputational and potential impact on access to international financing).

**Date:** Ongoing since late 2021.

**Outcome:** El Salvador has responded by strengthening its legal framework (e.g., the Digital Assets Issuance Law includes AML/CFT provisions) to address these concerns, aiming to comply with international standards.

IMF urges El Salvador to remove Bitcoin's legal tender status: https://www.imf.org/en/News/Articles/2022/01/25/pr2215-el-salvador-imf-executive-board-concludes-2021-article-iv-consultation