El Salvador’s adoption of Bitcoin as legal tender exposed the profound mismatch between legacy banking regulations and modern digital assets, according to Juan Carlos Reyes, president of the National Commission of Digital Assets (CNAD). Speaking at the Blockchain Summit Latam 2026 in Santiago, Chile, Reyes argued that regulating blockchain technology with traditional financial frameworks fails because legacy institutions lack the proper tools for software-based financial instruments.
When nations attempt to govern digital assets using central banks or traditional securities supervisors, they apply an outdated logic, according to Reyes. Comparing the situation to bringing an electric vehicle to a combustion engine mechanic, Reyes stated that traditional regulators search for nonexistent parts because they operate on mismatched assumptions about the underlying technology.
Defining the Boundaries of Bitcoin, Crypto, and Digital Assets
El Salvador distinguishes clearly between speculative cryptocurrency projects, Bitcoin, and regulated digital assets. According to Reyes, the broader “crypto” sector often functions as a speculative, transient industry comparable to early digital piracy networks like Napster. El Salvador rejects projects with purely speculative foundations because they lack transparent verification mechanisms.
Meanwhile, regulated digital assets inherit blockchain properties like immutability and transparency, enabling independent supervision under bespoke legal frameworks.
Institutional Reform and the Creation of the CNAD
To manage this nascent sector without relying on traditional banking supervisors, El Salvador passed the Digital Asset Issuance Law and established the CNAD in 2023. Reyes noted that the country’s prior economic constraints provided a blank slate, allowing authorities to build a specialized digital regulatory authority from the ground up.
The commission enforces strict admission standards, rejecting roughly 80% of the five to ten global corporate applications it receives each week. According to Reyes, anti-money laundering controls align strictly with Financial Action Force (FATF) standards, requiring rigorous customer oversight before any firm gains authorization to operate within the country.
Tokenization and Market Oversight
Regulated tokenization serves as a digital container for real-world value, but it requires active oversight to prevent fraudulent issuance, according to Reyes. Using the example of a local pizzeria, he explained that tokenizing an asset without verifying underlying production capacity risks creating unsupported claims of value.
This oversight model applies to fiat-backed stablecoins as well. When issuers like Tether acquire United States Treasury bills, El Salvador verifies the underlying reserves to ensure a one-to-one parity and sustained liquidity for digital tokens, according to regulatory disclosures.
Global Implications and Regional Blind Spots
As major financial players like BlackRock CEO Larry Fink increasingly embrace tokenization, institutional attitudes toward blockchain technology are shifting globally. However, Reyes cautioned that many regional markets remain blind to the scale of unmonitored digital asset flows.
Citing data referenced during the summit regarding cryptoassets circulating through Chile, Reyes warned that traditional central banks cannot accurately measure these volumes or enforce anti-money laundering protocols without formal regulatory frameworks. With Bitcoin holding a market capitalization of 1,3 billion dollars, ignoring the digital asset economy presents a growing systemic risk.
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