The U.S. Securities and Exchange Commission’s Crypto Task Force recently held a meeting with representatives from the El Salvador National Commission on Digital Assets (CNAD), Perkin Law Firm, and retired Goldman Sachs partner Heather Shemilt. The focus of the meeting was on establishing a cross-border sandbox for digital assets, with El Salvador offering its regulatory infrastructure as a testing ground.
The proposed project would involve a U.S.-licensed broker collaborating with a Salvadoran tokenization firm on two small-scale pilots: one for real estate tokenization and another for token-based capital raising. Participants would be limited to committing capital capped at $10,000 per scenario. The main objective is to provide the SEC with real-world data on token classification, custody solutions, and the integration of digital assets into U.S. regulatory frameworks without triggering full securities treatment.
The initiative aligns with policy priorities outlined by Commissioner Hester Peirce, focusing on alternative offering models and regulatory clarity for broker-dealers. If accepted, the pilot would serve as a live case study to inform future rulemaking in the digital assets space.
El Salvador’s CNAD has implemented tokenization projects across various asset classes and developed risk matrices that could potentially inform U.S. approaches. However, recent data from El Salvador’s Central Reserve Bank indicates a sharp decline in Bitcoin services within the country. Nearly 90% of registered Bitcoin service providers are now inactive, with only 20 firms remaining operational. This decline raises concerns about the viability of the legal and commercial frameworks put in place since Bitcoin was adopted as legal tender in 2021.
Despite the challenges with Bitcoin services, El Salvador continues to hold over 6,100 BTC and is pursuing broader tech ambitions, including partnerships around AI and the construction of a “Bitcoin City Airport.” The contrast between the administration’s ambitious plans and the market realities on the ground highlights the need for innovative approaches to digital asset regulation.
In conclusion, the proposal for a cross-border crypto sandbox between the U.S. and El Salvador represents a significant step towards exploring tokenization and regulatory frameworks in the digital assets space. The collaboration aims to provide valuable insights for regulators and industry participants, paving the way for future developments in the evolving landscape of digital assets.