- El Salvador approved new legislation aimed at legalizing BTC-backed bonds.
- The country will use the bond to finance its Bitcoin City development and mining infrastructure.
- Bitifinex was appointed to provide technical aid for the BTC-backed bonds, also known as Volcano bonds.
- El Salvador expects to raise more than $1 billion with the bonds.
- The new bill also creates a framework for other digital assets beyond Bitcoin bonds.
The legislative arm of El Salvador approved the passage of a new cryptocurrency bill on January 11. According to a statement by the National Bitcoin Office, the passed bill is geared towards legalizing BTC-backed bonds.
Today El Salvador builds on our first-mover advantage by passing landmark legislation establishing a legal framework for all digital assets that are not bitcoin. As well as those issued on bitcoin.
— The Bitcoin Office (@bitcoinofficesv) January 11, 2023
The law also paves the way for volcano bonds which we will soon begin issuing.
According to the announcement, the issuance of the bonds, otherwise called Volcano Bonds, will commence immediately.
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During the legislative session, the bill secured 62 votes to ensure its passage to President Nayib Bukele. Only 16 legislators voted against the bill.
The country aims to harness the crypto bond in paying down its sovereign debt. More so, El Salvador will rely on the bond to finance the development of its Bitcoin City project and Bitcoin mining infrastructure.
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El Salvador plans to make its proposed BTC City project a landmark crypto-mining hub powered by hydrothermal energy from a nearby volcano.
Bitfinex to Provide Technological Aid for the Bond
According to the country’s Bitcoin Office, Bitifinex has been appointed to provide technological aid for the Volcano Bond. The country believes it can fully leverage the bond through the efficiency of the appointed exchange.
Now, Bitifinex has reiterated its commitment to working with the authorities to ensure the bonds’ success.
"Bitfinex is the ideal partner with a proven success and innovation track record.” - Max Keiser @maxkeiser Bitcoin advisor to President Bukelehttps://t.co/aJzTmJZRrd pic.twitter.com/QdpBa881rp
— Bitfinex (@bitfinex) January 11, 2023
El Salvador expects to raise more than $1 billion with the bonds. Meanwhile, it plans to denominate the bonds in U.S. dollars and ensures its carriage of a ten-year maturity date, coupled with a 6.5 annual interest rate.
As revealed by Bitfinex, the bond’s volcano symbol manifested from the location of the country’s BTC City.
Beyond BTC-backed bonds, the new bill creates a legal framework for other digital assets. It also empowers the regulatory agency to monitor the application of securities law in protecting users from bad actors.
The El Salvador Bitcoin Office affirms the country’s plans to evolve the city into a special economic zone similar to Hong Kong. The city looks to provide tax benefits, crypto-friendly and clearer regulations, and foster incentivized Bitcoin businesses to El Salvador users.
On the Flipside
- El Salvador has been unrelenting in its quest to become a crypto hub. Recall that it was the first country to adopt Bitcoin as a legal tender. Since its adoption in 2021, Bitcoin has emerged as a medium of transactions within the country. The recent move has again reaffirmed its commitment to digital assets.
Why You Should Care
Under the leadership of President Nayib Bukele, El Salvador became the first country to adopt Bitcoin as a legal tender in June 2021. However, the move resulted in a loss of $60 million for the country within a year.
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