Crypto Regulations in El-Salvador 2025 : First Country to Use Bitcoin as Legal Tender

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El Salvador made history in 2021 as the first nation to adopt Bitcoin as legal tender. By 2025, the country has shifted toward a more regulated and voluntary framework for cryptocurrency, balancing innovation with international financial obligations and domestic realities.

El Salvador Crypto Regulation 2025: Major Developments Timeline

June 12, 2025 – “El Salvador Accountability Act of 2025” (S. 2058)

Reports required on— the amount of funds, list of crypto exchanges, location of crypto deposits, and information of individuals who have access to crypto, in El Salvador. 

It also mandates the U.S. Secretary of State to deliver a comprehensive report on cryptocurrency as a vector for the Bukele regime’s corruption

April 22, 2025: Discussion on Approaches to Address Issues in Crypto Regulation 

Officials like– Crypto Task Force Staff met with representatives from Perkin Law Firm, LLC, and the El Salvador National Commission on Digital Assets, as well as Heather Shemilt, Retired Goldman Sachs Partner, joined a meeting to discuss the resolution of crypto-related issues. 

March 2025: New Regulatory Framework Comes Into Effect

Marks the official beginning of El Salvador’s regulated crypto era.

The focus shifts from mandated usage to voluntary adoption and compliance.

February 2025: New Amendments Rolled Out

Bitcoin use in paying taxes and government fees was banned.

The state is no longer obligated to support Bitcoin transactions.

Bitcoin remains voluntary legal tender, i.e., permitted but not mandatory.

January 2025: Bitcoin Legal Tender Status Revoked

The Legislative Assembly voted to substantially rescind the Bitcoin Law.

Businesses are no longer legally required to accept Bitcoin.

Government’s official Bitcoin wallet, Chivo, was phased out.

Key Crypto Regulation Milestones in El Salvador

DateEvent/UpdateJune 2021Bitcoin Law announced and passed, making BTC legal tenderSeptember 2021Bitcoin Law takes effect; Chivo wallet launched2021–2024Continued government promotion, mining initiatives, and international criticismDecember 2024IMF loan deal agreed, requiring rollback of Bitcoin’s legal tender status

What the Government and Regulators Are Saying

National Commission for Digital Assets (CNAD): The main regulatory authority, CNAD oversees licensing, compliance, and enforcement for digital assets, aiming to foster innovation while ensuring financial integrity.

Central Reserve Bank (BCR): Supervises crypto activities, enforces anti-money laundering (AML) and counter-terrorism financing (CTF) standards, and registers Bitcoin service providers.

Government Position: President Bukele and regulators emphasize building a transparent, compliant, and internationally connected crypto ecosystem, even as direct state involvement in Bitcoin is reduced.

Crypto Tax 2025

For Investors/Traders: No capital gains tax on Bitcoin transactions, making El Salvador highly attractive for individual crypto investors.

For Crypto Companies: Firms benefit from substantial tax exemptions, especially if revenue is generated outside El Salvador. However, compliance with AML, KYC, and reporting standards is mandatory.

Reporting: Both individuals and companies must maintain records and report to CNAD and the Ministry of Finance as part of annual financial statements.

Crypto License in El Salvador 2025

To obtain a crypto license in El Salvador, entities are required to appoint a compliance officer and cybersecurity personnel to review the AML/KYC compliance. The licenses are granted by the National Commission of Digital Assets (CNAD). 

Two types of licensing: 

 Bitcoin Service Provider (BSP) license for Bitcoin-related services 

Digital Asset Service Provider (DASP) license for services involving other cryptocurrencies.

Crypto Adoption Rate in El Salvador

Public adoption remains low, with user penetration at 3.34% in early 2025. The number of active users is expected to reach over 214,000 by year-end, but most Salvadorans do not use Bitcoin for daily transactions.

The government is working on new initiatives to boost crypto utility and public perception.

Country’s Government Crypto Holdings

As of 2025, the Salvadoran government holds approximately 6,100 Bitcoins, valued at over $639 million, with continued purchases planned despite the policy rollback.

These holdings are managed as part of the Strategic Bitcoin Reserve Fund.

Crypto Mining in El Salvador

El Salvador has promoted Bitcoin mining using geothermal energy from volcanoes, positioning itself as a pioneer in sustainable crypto mining.

The state-owned geothermal company LaGeo operates mining facilities powered by 100% clean, emission-free volcanic energy, with a capacity of up to 95 MW5.

In Q1 2025, Bitfinex Securities announced plans to launch the Blockstream Mining Note 2 (BMN2) in El Salvador, further expanding institutional mining activities in the country.

The government continues to support mining as part of its broader digital assets strategy, leveraging renewable resources to attract global investment and innovation.

Conclusion

El Salvador’s approach to cryptocurrency in 2025 is defined by regulatory maturity and strategic adaptation. While Bitcoin is no longer mandatory as legal tender, the government maintains a crypto-friendly, tax-exempt environment and continues to invest in both Bitcoin holdings and sustainable mining initiatives. The regulatory focus has shifted to compliance, transparency, and international cooperation, positioning El Salvador as a unique hub for digital asset innovation in Latin America.