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.
#Plenary 90✍ We created the Digital Asset Issuance Law with 62 votes in favor. pic.twitter.com/g1poXwLoH3
— Legislative Assembly (@AsambleaSV) January 11, 2023
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.
3/ El Salvador is the epicenter of Bitcoin adoption and thus economic freedom, financial sovereignty, censorship resistance and unforfeitable wealth.
When we issue the first of the Vulcan bonds, we will once again pave the way forward for this new monetary revolution.
— Bitcoin Office (@bitcoinofficesv) January 11, 2023
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.
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%.
Related: Bitcoin, Sango Coin and the Central African Republic
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.
5/ The new legislation also creates the National Digital Assets Commission, a regulatory agency responsible for enforcing securities law and protecting the rights of buyers as well as issuers of digital assets in El Salvador and preventing fraudsters from operating here.
— Bitcoin Office (@bitcoinofficesv) January 11, 2023
