After celebrating one year of adopting Bitcoin (BTC) as a legal tender, El Salvador has doubled down on its push for crypto asset regulation in the region.
Specifically, a committee within El Salvador’s National Assembly is mulling the idea of accepting a ‘Digital Asset Issuance Law.’ According to the document which is now available on the official website of the National Assembly of El Salvador, the law seeks to “promote the efficient development of the digital asset market and protect the interests of acquirers.”
The law would serve as a regulatory framework for firms in the country that promotes transactions involving crypto assets. Ultimately, the digital asset issuance law will regulate the transfer operation of any digital currency. A national commission whose responsibility would solely be monitoring the certification and operations of these digital asset firms will also be created.
One uniqueness of the law is that it distinguishes digital assets from other assets and financial products, therefore, leaving no room for mistrust.
Any asset which falls into the digitization category must leverage a distributed ledger technology (DLT) or any other similar smart technology. For El Salvador, this is a further drive and a broader scope into other cryptocurrencies which are not BTC.
BTC Remains the Only Digital Legal Tender in El Salvador
Meanwhile, BTC remains the only digital currency that is a legal tender in El Salvador. The law only provides a legal stance for proposing other digital assets to citizens and residents of El Salvador.
Once approved and signed into law, digital assets service providers who wish to offer their products and services in the region will be required to go through a registration process and thereafter, follow the rules under the regulatory framework without violating any.
In addition to the registration, the firms will be asked to provide a list of the digital assets that they plan to offer including their benefits, restrictions, and limits. Demonstration of cybersecurity precautions and customer service capabilities, as well as providing the names and titles of company employees will be required from such entities.
The country’s acceptance of BTC has fuelled the proposal to launch a bitcoin fund management agency. Interestingly, in the wake of the implosion of the FTX Derivatives Exchange, President of El Salvador Nayib Bukele said the now-bankrupt exchange is the opposite of BTC. Also, he claimed that El Salvador does not store its Bitcoin holdings in FTX.