Self-custodial wallet / non-custodial software in El Salvador
Publisher of software where users hold their own private keys. The publisher never holds, controls, or has access to user funds.
Self-custodial wallet is permitted in El Salvador with no licensing burden.
Verdict Details
- Permitted
- yes
- Local entity required
- No
- Licensing burden
- None
- Last updated
- 2026-07-13
AML Obligations
- None — non-custodial software publishers do not fall under the VASP classification under the Ley de Regulación de los Proveedores de Servicios de Activos Virtuales (LRPVAS) because they never hold, control, or have access to user funds or private keys.
- The Digital Assets Issuance Law's licensing and AML/CFT obligations apply to Digital Asset Service Providers (PSADs) offering custody, exchange, transfer, or other services involving control over client digital assets — a pure software publisher lacks the requisite custody or control element.
Key Restrictions
- The publisher must not hold, control, or access user private keys or funds — any deviation (e.g., hosted key recovery, backup seed phrase storage) could trigger VASP/PSAD classification.
- If the software integrates any fiat on-ramp/off-ramp or exchange functionality where the publisher intermediates the transaction (beyond merely providing UI/API for third-party integrators), a PSAD license may be required.
- Consumer-protection/disclosure rules under the Digital Assets Issuance Law (e.g., Article 20 segregation, Article 21 fiduciary duty) apply only to licensed custodians, not to pure software publishers.
Key Risks
- ["Regulatory ambiguity: The line between 'non-custodial software tool' and 'VASP/PSAD' is not statutorily defined in SV law — if the regulator (CNAD) interprets wallet-integrated features (e.g., swaps, staking, fiat ramps) as constituting a 'virtual asset service,' enforcement action could follow.", "Pro-Bitcoin government stance (sv.enforcement.pro-bitcoin-stance-el-salvadors-government) reduces risk of hostile enforcement but does not eliminate it — the CNAD has broad licensing authority and could issue interpretive guidance expanding scope.", "If the wallet software is distributed in El Salvador or made available to Salvadoran residents, the publisher should ensure no custody function is offered and clearly disclaim any role as a custodian or financial intermediary.", "Chivo Wallet precedent (sv.enforcement.chivo-wallet-issues-internal-controls) shows government sensitivity to consumer harms in wallet services — a high-profile non-custodial wallet incident could attract regulatory scrutiny."]
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
Ley de Regulación de los Proveedores de Servicios de Activos Virtuales (LRPVAS)
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.
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).
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 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 & CNAD Licensing:
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.
Chivo Wallet Issues & Internal Controls:
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Yes — publishing non-custodial wallet software in El Salvador does not trigger VASP/PSAD licensing or AML obligations because the publisher never holds, controls, or accesses user private keys or funds, and the Digital Assets Issuance Law's licensing and custody rules apply only to entities providing custody or other intermediary services over client digital assets.
Questions this verdict aims to answer
- Does software publishing trigger VASP / MSB classification?
- Do AML obligations attach when no custody exists?
- What disclosure or consumer-protection rules apply?