El Salvador’s Volcano Bitcoin Bond Bill Receives Approval

With the BTC-backed bond, El Salvador aims to pay down its sovereign debt and finance its Bitcoin City project.

Nayib Bukele inside a Bitcoin dancing in front of falling Bitcoins.
  • 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.

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. 

El Salvador plans to make its proposed BTC City project a landmark crypto-mining hub powered by hydrothermal energy from a nearby volcano.

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. 

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Now, Bitifinex has reiterated its commitment to working with the authorities to ensure the bonds’ success.

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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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Soumen Datta

Soumen has been a dedicated researcher and writer in the field of cryptocurrencies for the last few years. Even though Indian crypto regulations are still unclear, he believes that India will continue to innovate in the years to come. He loves to play his guitar and sing along in his spare time. He holds bags mostly in BTC, ETH, BNB, MATIC, ADA.