Even in the midst of a bear market, El Salvador is increasing its wager on cryptocurrency. The first nation to recognize Bitcoin as legal cash is now drafting a law on the issuance of digital assets that would make it easier to deal with any crypto asset.
The bill would govern the transfer operations of any digital asset, attempting to "promote the efficient development of the digital asset market and protect the interests of acquirers," according to a document that can be seen on the National Assembly of El Salvador's official website.
The law is innovative in that it creates a specific legal framework for cryptocurrencies by separating them from all other assets and financial instruments. The law makes it clear that a digital asset must make use of a distributed ledger or a comparable technology in order to qualify for this classification. Perhaps the most well-known distributed ledger technology to date is the blockchain.
The legal framework forbids dealings with CBDCs (since they are fiat currencies subject to national financial regulations), with assets that are not eligible for trading or exchange, with assets that have restricted transactions, such as securities, and with sovereign assets covered by international law.
Lawyer for cryptocurrencies Ana Ojeda Caracas highlighted a few of the law's most intriguing aspects in a Twitter thread:
- establishing a database of online service suppliers.
- regulating cryptocurrency.
- a definition of stablecoins and tokens from a legal perspective.
- Public offerings of digital assets are subject to regulation.
- In some circumstances, tax exemption.
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