An Interview With El Salvador’s Top Crypto Regulator: ‘Developing Countries Can Lead the Financial Revolution’

The National Commission of Digital Assets is the agency in charge of regulating crypto in El Salvador, the first nation to accept Bitcoin as legal tender.

El Salvador, the first nation to adopt bitcoin (BTC) as legal tender, has a head-start on most other countries when it comes to regulating crypto. It was the first nation to adopt bitcoin (BTC) as legal tender, in 2021, and has since become home to a wide range of crypto companies.

“Looking at the big picture, most people won't understand what we're doing in El Salvador, they only see glimpses,” Juan Carlos Reyes, president of the National Commission of Digital Assets in El Salvador (CNAD) — which was created in February 2023 to regulate the crypto sector in the Latin American nation of 6.3 million souls — told CoinDesk in an interview.

“Even the foreign companies that are regulated here but don’t have a full office on-the-ground, they don't understand how advanced we already are, and how quickly things are advancing in this industry.”

President Nayib Bukele’s initiative forced the nation’s agencies to grapple with the technology and the implications of working with a digital currency, Reyes said.

Consequently, El Salvador avoided giving crypto supervisory and regulatory authority to its traditional financial regulators — like, for example, the Superintendence of the Financial System (SFS) — and instead created the CNAD from scratch. The objective was to create a tailor-made regulatory framework to crypto instead of trying to bend existing rules to digital assets.

“There’s an old saying in English: ‘If it sounds like a duck, it looks like a duck, and it quacks like a duck, it's probably a duck,’” Reyes said. “Well, in this case, it's not a duck. Digital assets are not like traditional financial instruments at all.”

That’s why the CNAD took a technology-minded approach to regulating crypto as soon as Reyes — a computer science heavyweight — became the agency’s leader in September 2023. The results have been shocking, according to crypto companies that received El Salvador’s Digital Asset Service Provider (DASP) license.

“We were completely caught off-guard by how knowledgeable, how detailed, how completely versed in not just regulations, but the technology [the CNAD was],” Nick Cowan, Group CEO of tokenization solutions firm VLRM, told CoinDesk in an interview. “Without trying to over-praise El Salvador, we were completely stunned by how quickly they were able to get to the heart of the matter to review our application.”

Victor Solomon, partner at Salvador-based tokenization advisory firm Tokenization Expert, concurred.

“We didn’t have to spend time explaining the technical foundations of our operations — [Reyes] already understood the intricacies of tokenization and the compliance measures we had in place,” Solomon told CoinDesk.

“He understands the practical challenges [that] businesses face, from fundraising to navigating regulations, and this makes him not just a regulator but an advocate for businesses that aim to positively impact the Salvadoran economy,” Solomon added.

The TechnologistBorn in El Salvador, Reyes moved to Canada as a child to escape the gang warfare that was, at the time, ravaging the country. A self-described “very high achievement person,” he has multiple bachelor’s degrees — computer science, math and physics — as well as a master’s degree in management from Harvard and a doctorate in philosophy from the People’s Friendship University of Russia. Not to mention the PhD in international economics that he’s now pursuing.

His professional background is just as varied. His experience ranges from leading a consulting firm for 15 years to developing business opportunities for the Missanabie Cree First Nation to opening a bar on the second floor of his beach house. A Bitcoin believer since 2013, he decided to move back to El Salvador in 2021 to take part in the cryptocurrency nationalization process.

The CNAD, which counts 35 employees, is fully independent, and modeled after Reyes’ image: everyone knows crypto (and the underlying technology) like the back of their hand. In fact, 20 members of the staff are currently enrolled in a post-graduate crypto program at the University of CEMA in Argentina to buff up their expertise.

“We have the most educated, most complete team when it comes to regulation of crypto assets in the world,” Reyes said. “If anyone doesn't know how to do a transaction on Bitcoin, including my driver, they probably cannot work here.”

This crack team certainly leaves a strong impression on the companies that seek to obtain a license to operate in El Salvador.

Reyes “is a technologist,” Cowan, whose company has worked with dozens of other regulators over the globe, told CoinDesk. “He absolutely gets the tech. In other jurisdictions, you have regulators who understand the regulations and investor protection, which, of course, is critical, but they don't necessarily understand the technology