What Demands Must Be Met To Obtain A Crypto Permit In El Salvador

What demands must be met to obtain a crypto permit in El Salvador

El Salvador is the first state in the world to legalize cryptocurrency as an official means of payment on par with the US dollar in 2021. Thus, both digital coins and USD have equal payment rights. The only thing is that only USD will be used for government financial reporting (accounting, auditing). Today, we want to discuss receiving an El Salvador crypto license and what demands your organization must meet.

Bitcoin for El Salvador

El Salvador has legalized virtual money at the national level because the crypto industry is actively developing and generating significant profits. State authorities actively support the crypto activities of licensed companies through preferential taxation. Organizations do not pay government fees and charge taxes on electronic currency, including capital gains and ordinary income. Other government taxes and duties can be produced with digital coins.

It is worth noting that licensing companies related to virtual money is straightforward, and the authorities strongly support people in business by loyally monitoring their activities. Since Bitcoin was legalized at the state level and regulations for crypto firms were approved, it became possible to attract international organizations to develop business related to digital assets. It will ensure practical cooperation and increase profits.

Licensing requirements

To obtain permission to operate virtual assets in El Salvador, you must meet several demands and comply with the Digital Assets Law. We will talk about these demands further.

First, you will need to register as a legal entity and then with the National Digital Assets Commission. To open a company, you need to have at least 2 shareholders. All management personnel (directors, shareholders, founders) must have passports with registration. You will also need to draw up a business project that can confirm that your company can provide services with virtual assets. The presented organizational structure should indicate the positions with names and what responsibilities apply to them. It is necessary to understand the business processes within the company.

The program must protect against cyber hacking and regulations for processing virtual assets. The firm must systematically create financial statements of its activities, follow all rules to ensure customer protection and consider financial risks (including the refund algorithm). It will also be necessary to closely cooperate with regulatory authorities and submit all the required reports on the company’s activities. An important point is that it is essential to implement AML and KYC policies into the organization's program.

The process of receiving a document

We list the steps that must be taken to receive permission for crypto activities here.

Select an organizational structure and name the company

The first step is to decide on the form of the company, and the optimal choice will be the LLC type. You must also give the firm a unique name and register with the register.

Collect papers

When a name is assigned, the collection of the necessary package of documents begins, including copies of management personnel ID cards, the presence of a physical office, certificates of no criminal record, and much more. Manuscripts must be certified by a notary.

Apply for registration

The application and a package of documents are submitted to the relevant authority. The application will be accepted for consideration, and if everything is in order with the documents, the company will be issued a certificate of registration.

Open a bank account

When registering a company, you can open a bank account. At the end of the registration process, you must contribute 5% of the authorized capital, which is 2,000 USD. Many Salvadoran banks will require a physical presence to open a bank account, but there are also some places where the report can be opened remotely.

Register with government agencies

After registering a firm, you must contact the following government agencies here:

• Tax Inspectorate;

• Social Security Institute;

• Ministry of Labor;

• Ministry of Finance.

It is required by state legislation and can only start an activity by registering with these bodies.

Obtain a permit

Based on the Bitcoin Law, the firm must register with the register of BTC service providers and the Central Reserve Bank. The virtual asset service provider must register in CNAD (National Commission of Digital Assets).

Having passed all registration authorities in El Salvador, the company will become regulated by SSF, which means it can engage in crypto activities and develop its business legally.