After declaring Bitcoin as legal tender in 2021, El Salvador is now working on a Digital Asset Insurance Law to facilitate operations with any crypto asset.
The law, as per the portal of the National Assembly of El Salvador, would regulate the transfer operations of any digital asset. It wants to promote the efficient development of the digital asset market and protect the interests of acquirers.
The Nayib Bukele-led government wants to separate crypto assets from all other assets and financial products through this law. It’s looking for a customized regulatory framework. The digital asset must use a distributed ledger or a similar technology to fall under this category. It should be noted that the law’s framework excludes transactions with Central Bank Digital Currencies (CBDCs) because they are fiat currencies and regulated according to their respective countries’ financial guidelines. Thus, CBDCs are ineligible for trading or exchange, assets with restricted transactions such as securities and sovereign assets regulated by foreign laws.
Ana Ojeda Caracas, the cryptocurrency lawyer, shared some interesting features of the law such as the creation of a registry of digital providers; inclusion of a legal definition of stablecoins and tokens; legalization of cryptos; tax exemption in some cases; and regulation of public offerings of digital assets. But there have been some criticisms as well. A Salvadorian hacktivist Mario Gomez believes the new law was created to benefit troubled foreign companies, wanting to increase the attractiveness of El Salvador as a haven for the crypto industry. He said such companies focus on small countries because it is easier to sit directly with a president being a big company and implement measures that benefit them.