Opening a cryptocompany in El Salvador is highly beneficial due to the recognition of Bitcoin as legal tender, tax exemptions on capital gains from virtual currency transactions as well as low cost of living and doing business. Although registering a crypto entity can seem daunting, especially if you’re unfamiliar with the jurisdiction’s requirements, our lawyers at Eternity Law International will help you navigate the process. How to register your cryptocompany in El Salvador, including the paperwork, fees, and the timeline for the registrating process – read on our guide.
El Salvador and cryptocurrency: features of a cryptolicense in El Salvador
If you’re planning on setting up a cryptocompany in El Salvador without timely red tape, you may consider ready-made licenses for sale on our website. Another option is getting a license from scratch from the Central Bank, a monetary authority of the state. It grants you permission to work with cryptocurrency in a regulated framework, making it easier and safer for clients to do business with you.
One of the features of a permit for working with crypto is an οbligation for cοmpliance. All licensees must adhere to AML and KYC protocols. These protocols are designed to protect both clients and businesses from potential fraud and illegal activities. In addition, legal entities need to continuously store records of their transacting activities and provide regular reports to the Central Bank.
Another feature of the license is that legal entities must carry out customer due diligence checks when dealing with customers under monetary regulative acts. This helps protect against identity theft, as well as ensuring that customers understand the risks related to trading cryptocurrency. Legal entities must also ensure that their activities do not breach any local or international laws or regulations.
Crypto licenses in El Salvador – overview
As of 2021, El Salvador became the first state to recognize Bitcoin as a legal tender. This means that any legal entity looking to perform commercial activities with virtual currency must complete a registration process with the government and become a licensee.
There are 2 types of licenses for cryptocurrency in El Salvador. The first is a “Cryptoservices Provider” permit, which allows legal entities to trade or exchange digital assets for clients. The second is a “Virtual Asset Management” license, which permits entities to hold or manage digital assets on behalf of others.
To acquire either of these licenses, there are some rules that must be met. These include registering a formal business entity for profit, which may be a corporation, a partnership, association, or individual proprietorship with the Superintendence of the Financial System (SSF), providing detailed data about the entity and its founders, and meeting financial and technical standards set by the SSF.
It must be noted that failure to register or operate without an official permit can result in fines or even criminal charges. Therefore, it’s crucial for any cryptocompany looking to enter the El Salvador market to ensure they satisfy all terms before beginning operations.
Acquiring a permission for cryptocurrency in El salvador
Once a legal entity is registered in El Salvador, an applicant needs to obtain a permit to operate in the Fintech industry. To become a licensee, it is obligatory to follow these steps:
- Gather the papers: a business overview, proof of legal existence, and background data for all company directors and shareholders.
- Submit your request: Once you have gathered all papers, you can submit your application to the Superintendencia del Sistema Financiero (SSF). The application fee is $5,000.
- Await review: The SSF will review your application for El Salvador cryptocurrency license and may request further data or clarification.
- Receive approval: If approved, you will receive a permit to carry out activities in the cryptoindustry.
Tax Obligations for Cryptocompanies in El Salvador
As with any business, you must pay taxes on your profits and other income. In EL Salvador, the taxes regarding digital assets are as follows:
- Income Tax
Holders of El Salvador cryptocurrency licenses are subject to income tax, which is calculated based on your company’s profits. The current corporate tax rate is 30%, but there are some exemptions available for certain types of businesses.
- Value-Added Tax (VAT)
In addition to corporate tax, you may also be subject to VAT on your cryptotransactions. The current VAT rate in El Salvador is 13%, but it’s crucial to note that the rules around cryptotaxation are still evolving, so it’s significant to stay up-to-date on any changes.
By understanding your tax obligations as a cryptocompany in El Salvador, you can ensure that you’re staying compliant and avoiding any potential legal or financial issues down the line.
El Salvador and cryptocurrency: how much does a crypto license cost?
Acquiring a cryptocurrency El Salvador license involves various fees that you must pay to the authorities. Initially, you will need to pay a fee of $5,000 to the SSF for your application. Additionally, there are ongoing fees that you will need to pay annually, which include a renewal fee of $1,000 and a supervision fee of 0.25% of your company’s gross income. It should be noted that these fees are subject to change, so it’s important to check with the SSF for any updates.
Register your crypto company in El Salvador with Eternity Law International
El Salvador’s recent adoption of Bitcoin as a legal tender has made the country an attractive destination for cryptocurrency firms. With a supportive and innovative regulative ecosystem, it’s no wonder that more and more entities are choosing to establish themselves in El Salvador. Our lawyers at Eternity Law International provide a comprehensive service in the field of legal advice, business certification, licensing of cryptooperations, and legal support for businesses around the world. If you are interested in registering a cryptocompany in El Salvador, please contact us and get a consultation on opening an exchange and getting a cryptocurrency El Salvador license to operate.
How does crypto work in El Salvador?
In El Salvador, Bitcoin is recognized as a legal payment mean. Companies working with cryptocurrencies can provide the following options for the operation of crypto-funds.
- Crypto service provider: companies can trade (buy/sell) or exchange digital assets for clients.
- Virtual Asset Management: storing or managing digital assets on behalf of others.
Both of these types of activities require a cryptocurrency El Salvador license.
Is Cryptocurrency working in El Salvador?
In El Salvador, cryptocurrency can be bought, sold and exchanged between each other or for fiat. Bitcoin is also recognized as a legal payment mean. To operate with cryptocurrencies, an appropriate El Salvador cryptocurrency license is required.
What Cryptocurrency is El Salvador using?
If we talk about El Salvador and cryptocurrency, Bitcoin is mostly used in this jurisdiction, which is recognized as a legal payment mean. This cryptocurrency is actively promoted in this jurisdiction.
How does El Salvador regulate crypto?
Cryptocurrency in El Salvador is regulated by the Directorate General of the Financial System (SSF). The same body issues appropriate licenses for crypto-activities. To obtain such approval, companies are required to meet the standards set by the SSF.
Why is El Salvador interested in Bitcoin?
Bitcoin is the first and most progressive cryptocurrency in the world. Interest in Bitcoin is growing steadily. This is why the El Salvador cryptocurrency community became the first space in the world to approve Bitcoin as a legal payment mean.