Image source: @VisualChina
On April 12, the crypto industry, which has been immersed in negative news, ushered in what may be the most positive news of the year so far, with digital asset exchange Bitfinex Securities El Salvador receiving a license from El Salvador's National Digital Asset Commission on April 11.
According to the announcement issued by Bitfinex, the license was issued, making Bitfinex Securities El Salvador "the world's first international digital asset platform approved as a digital asset service provider" in El Salvador. Paolo Ardoino, Bitfinex's CTO, noted that the license will allow "Bitfinex Securities to facilitate the issuance and secondary trading of assets with clearly defined rights and obligations outlined in the new digital asset regulatory regime." ”
Bitfinex Securities El Salvador will be independent of Bitfinex Group's current platform, Bitfinex Securities AIFC, and managed by Bitfinex Securities Limited. The newly formed entity, Bitfinex Securities El Salvador, will provide a regulatory-compliant platform for global companies to issue digital assets such as stocks, bonds and other financial instruments.
The license issuance was based on El Salvador's Law on the Issuance of Digital Assets, passed in January 2023 by a high vote of El Salvador's National Congress (62 votes out of 84). The Act also establishes the National Digital Asset Commission, the regulatory body responsible for applying securities laws to protect the rights of purchasers and issuers of digital assets in El Salvador.
Chained was informed that the initial registration fee for applying for a license in El Salvador only requires at least 15 jobs with a minimum wage of $5,475 and 10 jobs with a minimum wage of $3,650 for later renewals; The issuer only needs to pay a fee of 0.01% of the public offering amount of the issuing currency, and the handling fee is $50.
As always radical El Salvador
As we all know, El Salvador was the first country to adopt Bitcoin as legal tender. On June 8, 2021, El Salvador's 30-year-old president, Nayib Bukele, promulgated the Bitcoin Law by his legislative assembly, and in September the country listed Bitcoin, which was extremely volatile at the time, as legal tender (according to Chainde, the price of Bitcoin remained around $68,000 in November 2021). Another legal tender in El Salvador is the US dollar, which was introduced in 2001, and the background is also that most people work in the United States, and the foreign exchange and local circulation of the US dollar are huge. For details, please refer to the previous article of Chainde: The first anniversary of the Bitcoin Act: What has happened to El Salvador, which has self-destructed 800?
And, because it is classified as legal tender, like any fiat currency, Bitcoin transactions are not subject to capital gains tax.
According to public data, the Bukele government has purchased 2,381 bitcoins for $107 million. On November 17, 2021, Bukele announced that his government would buy one bitcoin a day, but did not specify how long it would last, and the exact amount of bitcoin held by the government is currently unknown.
Another very radical move is to create the "City of Bits". In November 2021, Bukele announced the construction of a "Bitcoin City" in the eastern part of La Union. At the same time, $1 billion in bonds were issued on Blockstream's Liquid Network, a federal bitcoin branch. The goal of the bond issuance is to invest half of the money in Bitcoin and the other half in the infrastructure needed to build a Bitcoin industry in the Central American country. According to the statement at the time, the bonds yielded 6.5% and provided investors with a fast track to obtaining citizenship in the country. For details, please refer to the previous article of Chainde: The Bitcoin Act takes effect today, does El Salvador get fragrant potatoes or hot potatoes?
However, there is no agreed regulatory framework at the G20 summit, and the legitimacy of crypto assets is still worrying, please refer to the previous article of Chainde: [Chainde's exclusive] The G20 summit ended, and there was no international cooperation on the supervision of crypto assets.
Licenses in El Salvador differ greatly from those in Japan
Although Japan is the first country in the world to issue a digital asset exchange license, the license issued by El Salvador to Bitfinex this time is obviously much higher than the license content of more than 30 in Japan.
In fact, according to the framework of crypto asset supervision in Japan and El Salvador, the definition of crypto assets, and the status conferred, we can roughly understand why El Salvador's license is more valuable.
Although Bitcoin can also be used for payments in Japan, it is not legal tender, so it is much restricted in trading, and cryptocurrencies as "investment asset portfolios" are regulated by the framework of Japan's Securities and Exchange Law and Fund Decision Algorithm. For details, please check the previous article of Chainde: [Chaindet Exclusive] Digital Yen issued in April, an overview of the structure and Japanese regulatory policies.
El Salvador's Digital Asset Issuance Law, as an independent crypto-asset regulatory act, directly restricts the transfer of crypto-assets, public offerings, issuer requirements and obligations, digital asset service providers, and any other potential participants in the public offering process.
As we all know, in the early stage of crypto asset trading, the application and approval system for Japanese trading licenses was mainly copied from other Japanese securities investment systems, mainly to restrict the barbaric growth of crypto asset trading platforms, and tried to block the entry of foreign platforms by issuing licenses. After the Coincheck incident in 2018, the supervision was stricter, and the trading platforms that had obtained licenses in Japan were bound by regulations, so that the Japanese market, which was ranked first in the world at that time, gradually faded out of the world stage, and Luoyang Paper's license has become a chicken rib for many exchanges since 2022. For details, please refer to the analysis article before Chainde: [Chainde's exclusive] Fragrant food becomes a mess: Why do the big guillotines of crypto industry giants start in Japan?
El Salvador's license is a maintenance and expansion function with strong extension. The Digital Asset Issuance Law stipulates that the state can publicly issue crypto assets, and the Ministry of Finance, the Central Reserve Bank, autonomous institutions, private individuals and legal entities can issue crypto asset currencies.
In fact, in addition to the definition of the obligations and responsibilities of state subjects, the definition of private enterprises is worth studying. Digital Asset Service Providers (PSAD) as defined by the Act: Those natural or legal persons who are committed to providing digital asset services and have domicile in El Salvador, or who promote and market services in El Salvador although they do not have domicile in the country.
Moreover, the Act is clearly decentralized, providing for the following services that can be provided after obtaining a license:
Use their capital or third-party capital to exchange digital assets for fiat currency in trust (FIAT) or their equivalents or other digital assets.
Trading platforms that operate exchanges, digital assets or derivative digital assets.
Assess risk and price, as well as subscribe to digital assets.
Place digital assets on digital platforms or wallets.
Promote, build, and manage a variety of digital asset investment products.
In order to attract companies in the crypto industry, El Salvador not only gives citizenship, the bill stipulates that all issuers, providers, certifiers, acquirers and public issuers of digital assets will enjoy the following benefits:
The notional value and return or income of the digital asset will be exempt from various liens, taxes, tax rates, and contributions.
Capital gains or ordinary income derived from the transfer of digital assets by any means will be exempt from any type of tax.
Issuers, certifiers and registered digital asset service providers will enjoy the tax benefits set out by LEAD, exempt from VAT, income tax, municipal tax or any other type of tax (regardless of their nature); If the above obligations apply to them, they will also be exempt from the obligation to withhold the said taxes.
In the case of legal persons, the tax benefits of the first two points will apply to partners or shareholders considered separately; Profits or dividends on the activities detailed above.
When exchanging the operation of a digital asset for goods or services not detailed in the Act, the tax benefits provided for in the preceding paragraphs will not apply.
It seems that, in addition to Saudi Arabia, the Central American country is really going to fight back through crypto assets. In the battle for the throne of the global crypto center, there are also Hong Kong, Japan, Singapore and other countries and regions, please refer to the previous article of Chainde: [Chainded Exclusive] is expected to attract more than 80 crypto companies in half a year, will Hong Kong in All become a global crypto center?
[This article was originally published on Chainde, authorized to be released by Titanium Media App, author: Goro Maori ]