Famous for buying Bitcoin (BTC), El Salvador recently approved a bill that is considered by some to be a milestone for BTC. Thus, the country provided the regulatory framework for a BTC-backed bond. Here are the details…
Important Bitcoin law approved in El Salvador
El Salvador has passed landmark legislation providing the legal framework for a BTC-backed bond known as the “Volcano Bond” that will be used to pay off government debt and fund the construction of the proposed “Bitcoin City”. The bill, which was accepted on January 11 with 62 yes and 16 no votes, is expected to become law after it is approved by President Bukele. The National Bitcoin Office of El Salvador announced the adoption of the bill in a Twitter thread on January 11, stating that it will begin issuing bonds soon.
According to crypto exchange Bitfinex, the technology provider of the bonds, Volcano Bond or Volcano Tokens will allow El Salvador to raise capital to pay off government debt, fund the construction of Bitcoin City, and build Bitcoin mining infrastructure. The word “Volcano” for the bonds is derived from the location of the country’s Bitcoin City, which is expected to become a renewable mini-crypto hub powered by hydrothermal energy from the nearby Conchagua volcano.
$1 billion expected to be raised with bonds
Bitfinex says the city will be a special economic zone similar to those seen in China. Apart from that, he states that it will offer tax benefits, crypto-friendly regulations and otherwise encourage Bitcoin businesses for its residents. The bonds are targeted to raise $1 billion for the country, half of which goes to the construction of the special economic zone. According to the initial proposal, tokenized bonds will be denominated in US dollars. The bonds will also have a maturity of ten years and carry an annual interest rate of 6.5 percent.
Samson Mow, a Bitcoin advocate who was involved in the development of the Volcano Token, said that the bill’s adoption could help transform the country into a “big” financial centre. According to Mow, these new instruments such as the new digital securities law and BTC bonds will point to positive developments for the country. Mow thinks these moves will help El Salvador pay off its current debts. He also believes these will be critical to transforming El Salvador into a major financial center of the world.
The bill also includes a legal framework for all non-Bitcoin crypto assets, namely altcoins, alongside Bitcoin. It also creates a new regulatory body that will be responsible for enforcing securities law and protecting the space from “bad actors.” cryptocoin.com As we reported, El Salvador adopted Bitcoin as a legal currency in September of 2021.
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