These are rules for BTC trading apply in El Salvador

The central bank of El Salvador has published two PDF files on BTC regulation. That is their content.

The Central Reserve Bank of El Salvador (BCR) published two PDFs on August 17, 2021, which regulate the relationship between BTC and banks. It wasn’t until 2021 that the small state of El Salvador made history when it became the first country in the world to ennoble BTC as legal tender. After that, there was mixed news about this legalization. More than three quarters of all Salvadorans see BTC as a means of payment critically.

First file – guidelines for authorization

The first  file consists of 9 pages and is called: “Lineamientos Para la Autorización del Funcionamiento de la Plataforma de la Billetera Digital Para BTC y Dólares” – “Guidelines for the authorization of the operation of the digital wallet platform for BTC and US dollars”. The PDF file is about the fact that companies have to apply to the BCR in order to offer customers wallets. In addition, companies planning to make BTC available to their customers have to present a kind of “BTC Business Plan”. This includes, among other things, a risk assessment, which contains information on how customers are informed about the risks of BTC, as well as a complaint procedure. The central bank of El Salvador also requires that each wallet be clearly assigned to a legal entity. A KYC process is therefore necessary. In addition to the points mentioned above, the file also names an anti-money laundering system and the regulation of how BTC is stored at the bank itself.

Second file – Technical standards

The second PDF has 25 pages, so it is a little more extensive and is called: “Normas Técnicas Para Facilitar la Aplicación de la Ley BTC” – “Technical standards to facilitate the application of the BTC law”. Among other things, it describes that service providers who offer cryptocurrencies for trading must comply with money laundering laws and other regulations. Furthermore, financial institutions must warn potential crypto buyers that BTC is very volatile and that trading is extremely risky. Such as the total loss. If customers lose their access data or carry out a transaction to the wrong destination address, then their coins are gone and so is their money. No bank can carry out a reverse transaction.

Article 51 of the second published guideline file reads as follows.

“Requirements for transactions with BTC:

Art. 51. Supervised companies must record, retain and transmit the following information when dealing with BTC transactions:

a) Name and address of the customer of the financial institution;

b) identification that BTC was used for the transaction;

c) The amount of BTC used for the transaction;

d) The time of the transaction;

e) the estimated value of the transaction in US dollars (…)

f) all payment orders received from the customer of the financial institution;

g) Name and address of each counterparty of the customer of the financial institution; and

h) any other information relating to the transaction, the accounts and, if available, the accounts, and, if reasonably available, the parties involved. “

The central bank also announces in the PDF file that business relationships of supervised companies are to be kept for 15 years:

(…) Art. 53. Obliged parties must maintain the registration obligations that they have to ensure during the business relationship with the customer and for a period of 15 years after the end of the business relationship.

Legalization of BTC as a means of payment

The legalization of Satoshi’s coin as legal tender in El Salvador has raised several questions. For example, does every shopkeeper just have to accept BTC? El Salvador’s Finance Minister Alejandro Zelaya answered the question in a television interview: The dollar remains the country’s main reference currency and the use of BTC is complete optional.

We are far from the fact that El Salvador will become a free BTC country in which you can do whatever you want with BTC. Because even the central bank of a comparably small country like El Salvador cannot simply take the reins out of hand. Your word carries weight. And this word is now echoed in the two published PDFs.