Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

June 14, 2021

El Salvador approves bitcoin as legal tender

The law would allow bitcoin to be used as legal tender in El Salvador. It would establish rules for bitcoin exchanges and allow for the instantaneous conversion to the US dollar.

On 8 June 2021, El Salvador’s Legislative Assembly approved the Bitcoin Law, which would establish bitcoin as legal tender in El Salvador.

Once enacted, the law would require bitcoin to be accepted as legal tender in any transaction carried out by entities or individuals. Companies that do not have the technology to conduct Bitcoin transactions, however, would not be required to accept bitcoin.

The law would establish the US dollar as the reference currency for accounting purposes. Additionally, the exchange rate between bitcoin and the US dollar would be established by the open market. The law also would not subject bitcoin exchanges to capital gains tax. The law, however, does not elaborate on the specific tax treatment of bitcoin exchanges.

In addition, the law would allow:

  • Any price to be expressed in bitcoin
  • Tax contributions to be paid in bitcoin
  • All monetary obligations expressed in US dollars existing before the law’s effective date to be paid in bitcoin

The law would authorize the Government to promote the use of bitcoin in transactions, and to allow the instantaneous conversion from bitcoin to the US dollar, which would be guaranteed by a trust created in the Development Bank of El Salvador (BANDESAL in Spanish) – a State-owned Bank.

The Central Reserve Bank and the Superintendence of the Financial System will issue the corresponding regulations before the law’s effective date. The regulations will establish the limitations and operation of the instantaneous bitcoin to US dollar conversion.

The Law would be effective 90 days after its publication in the Official Gazette.


For additional information with respect to this Alert, please contact the following:

Ernst & Young El Salvador

Ernst & Young LLP (United States), Latin American Business Center, New York


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more