El Salvador Passes Landmark Crypto Bill For Bitcoin-Backed Bonds

January 12, 2023 3:03 pm Comments

The country of El Salvador once again made crypto history when it recently passed a new landmark crypto bill that establishes regulation for a new Bitcoin-backed bond.

The bond is named the “Volcano Bond” and has many official use cases such as being able to be used for paying sovereign debt and funding public projects.

This is a huge milestone for the industry and could very likely change the international financial landscape as other countries may have to accept such bonds as payment.

The bill had also passed with the majority  of the legislators in favor of the bill which indicates that the leadership of this country is very much pro-crypto.

Whether or not other countries in the world will also start creating crypto-backed bonds is still to be determined, but the likelihood of it happening seems to be only a matter of time.

CoinTelegraph reports:

The National Bitcoin Office of El Salvador announced the passage of the bill in a Jan. 11 tweet thread, noting that they will begin issuing the bonds soon.

According to crypto exchange Bitfinex, which is the technology provider for the bonds, the Volcano Bond — or Volcano Tokens — would allow El Salvador to raise capital to pay down its sovereign debt, fund construction of the Bitcoin City, and create Bitcoin mining infrastructure.

The volcano descriptor for the bonds is derived from the location of the country’s Bitcoin City, which is set to become a renewable crypto-mi hub powered by hydrothermal energy from the nearby Conchagua volcano.

Bitfinex notes that the city would be a special economic zone similar to those seen in China, which would offer tax advantages, crypto-friendly regulations and otherwise incentivize Bitcoin businesses for its residents.

What is especially impressive is the amount of funds that the country expects to be able to raise with these new bonds.

Current projections show that they are estimating the bonds to be able to raise around $1 billion which is a significant amount of capital for the small country.

The fact that they are able to raise that much indicates that there is a lot of investor confidence in digital assets like Bitcoin and that these assets will be able to maintain their value in the long term.

Looking at the big picture, now that such a pro-crypto bill has finally passed in the country, many speculators believe that this will be the start of many crypto legislations that will eventually turn El Salvador into a future crypto hub.

Many other legislations are already in the line after this bill and the success of this in the country may continue to spread across Latin America.

BitcoinMagazine concludes:

El Salvador’s Bitcoin Office released a statement in response to the vote that read in part, “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. The law also paves the way for the volcano bonds which we will soon begin issuing.”

In a statement to Bitcoin Magazine, Max Keiser, a Bitcoin educator and advocate who has also been a major proponent for El Salvador’s adoption of bitcoin since the process began, states that he believes “This is one of the most important milestones yet.

Making Bitcoin legal tender in September, 2021 put El Salvador on the global financial map. This new law furthers the mission of President Bukele by establishing a foundation for a new global, digital securities layer built on Bitcoin.”

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