El Salvador has passed a landmark crypto bill that paves the way for Bitcoin-backed bonds

El Salvador has passed a landmark crypto bill that paves the way for Bitcoin-backed bonds
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El Salvador has passed landmark legislation providing the legal framework for a Bitcoin-backed bond known as a “Volcano Bond” that will be used to pay off sovereign debt and finance the construction of its proposed “Bitcoin City.”

The bill was adopted in January. 11 with 62 votes in favor and 16 against and is set to become law after ratification by President Bukele.

El Salvador’s National Bitcoin Office announced that the bill was passed in January. 11 Twitter threads have mentioned that they will start issuing bonds soon.

According to Bond technology provider Bitfinex cryptocurrency Vulcan Bond – or Vulcan Tokens – will allow El Salvador to raise capital to pay off its sovereign debt, finance the construction of Bitcoin City and create Bitcoin mining infrastructure.

The volcano image for the bonds is taken from the site of Bitcoin City, which is planned to become the center of the country’s renewable crypto-mini. powered by hydrothermal energy from the nearby Conchagua Volcano.

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Bitfinex notes that the city will be a special economic zone similar to those seen in China will offer tax benefitscrypto-friendly regulations and otherwise incentivize Bitcoin business for its residents.

The bonds aim to attract $1 billion to the country, half of which goes to the construction of a special economic zone.

According to the initial statement offertokenized bonds will be denominated in US dollars, have a ten-year maturity date and annual interest rate 6.5%.

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Samson Mow, a Bitcoin proponent involved in the development of Vulkan Token, told Cointelegraph that the bill’s passage could help make the country a “major” financial center.

“The adoption of the new Digital Securities Law and the launch of new instruments such as Bitcoin Bonds will help El Salvador pay its current debts and will be crucial for the country to become a major financial center in the world.”

The bill also includes a legal framework for all non-Bitcoin digital assets in addition to those issued in Bitcoin, and creates a new regulatory body to enforce securities law and protect against bad actors.