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El Salvador is doubling down on its bet on cryptocurrencies even in the midst of a bear market. The first country to declare Bitcoin as legal tender is now working on a Digital Asset Issuance Law, which would facilitate operations with any crypto asset.
According to a document available on the official website of the National Assembly of El Salvador, the law would regulate the transfer operations of any digital asset, seeking to "promote the efficient development of the digital asset market and protect the interests of acquirers."
The novelty of the law is that it separates crypto assets from all other assets and financial products, thus creating a tailor-made regulatory framework for them. The law leaves no room for doubt: for a digital asset to fall under this categorization, it must use a distributed ledger or a similar technology. The blockchain is perhaps the most popular distributed ledger technology to date.
The law's framework excludes transactions with CBDCs (as they are fiat currency regulated according to each country's financial guidelines), assets not eligible for trading or exchange, assets with restricted transactions such as securities, and sovereign assets regulated by foreign laws.
In a Twitter thread, cryptocurrency lawyer Ana Ojeda Caracas pointed out some of the most interesting features of the law:
- Creation of a registry of digital providers.
- Legalization of cryptos.
- Inclusion of a legal definition of stablecoins and tokens.
- Regulation of public offerings of digital assets.
- Tax exemption in some cases.
Criticisms of the new law were not long in coming. Mario Gomez, a Salvadoran hacktivist with a strong critical stance on the way President Nayib Bukele implemented the Bitcoin Law, claimed that the new law was created as a way to benefit troubled foreign companies, seeking to increase the attractiveness of El Salvador as a haven for the crypto industry. "The reason why these companies focus on small countries is because it is easier to sit directly with a president being a big company and implement measures that benefit (them)," he assured in a Twitter space analyzing the issue.
President Bukele introduced the famous Bitcoin Law in Congress in June 2021. A few hours later, it had already been approved by the National Assembly with a large majority of the pro-government party. If this is anything to go by, the new law will likely come into force in a similarly hasty manner.