El Salvador’s Comisión Nacional de Activos Digitales (CNAD) is actively pursuing the establishment of a cross-border regulatory sandbox that would involve cooperation with the U.S. Securities and Exchange Commission (SEC).
“We want to create international collaboration”
“Our greatest message is that digital assets don’t have geographical limits. Collaboration among regulators should transcend international boundaries as well.”
— Juan Carlos Reyes, President of CNAD
Currently, El Salvador finds itself in a distinctive position as it lacked robust financial institutions when Bitcoin was adopted as legal tender in 2021. This situation allowed CNAD to formulate a regulatory framework with a fresh perspective tailored specifically for cryptocurrency.
Nearly two years after Reyes took the reins, El Salvador’s advanced regulatory infrastructure has attracted major cryptocurrency firms like Tether, Bitfinex, and Binance to establish operations in the nation. The CNAD aims to allow the SEC to utilize El Salvador as a live example to evaluate streamlined regulatory frameworks for digital assets, thereby allowing the SEC to glean insights from El Salvador’s experience as it revises its own regulatory policies.
The proposed pilot program will explore various scenarios, such as a U.S.-licensed finance broker obtaining a digital asset license through CNAD guidelines, alongside the development of small-scale tokenization projects managed by a licensed CNAD company, all caped at a maximum of $10,000.
Moreover, in February, SEC Commissioner Hester Peirce indicated a shift in the SEC’s approach to crypto regulation, further validating CNAD’s proposals. Erica Perkin, part of CNAD’s advisory board, mentioned that CNAD has built a flexible framework that can effectively address the SEC’s needs for data gathering, emphasizing their readiness to assist in this endeavor.
The CNAD recently engaged with the SEC’s Crypto Task Force on April 22, where the dialogue was described as constructive, highlighting the SEC’s proactive engagement and willingness to listen. Reyes has also formalized cooperation agreements with regulators in Argentina and Paraguay, illustrating the international scope of the initiative.
“The expertise within the SEC Crypto Task Force is impressive. They truly comprehend the technology, allowing for focused discussions on what’s necessary for effective regulation. It felt remarkably refreshing,” said Reyes.
