El Salvador's Legislative Assembly recently passed the digital securities bill.
Once the president assents to the bill, it will allow the issuance of Bitcoin bonds, colloquially called 'volcano bonds'
El Salvador's president is bullish on Bitcoin.
The National Bitcoin Office of El Salvador took to its Twitter page to announce the passage of the "Volcano Bond" bill. The passage of the landmark legislation provides the legal framework for the Bitcoin-backed bond.
According to the Twitter thread by Asamblea Legislativa, most lawmakers supported the bill with 62 votes.
On the other hand, the opposing lawmakers had 16 votes. The supporters had their way, and the bill will be lawfully passed when President Bukele ratifies and passes it.
Some important clauses in the bill include consumer protection from bad actors in the crypto ecosystem. Similarly, the bill covers the Government's stance and its "openness" to partnering and welcoming "all those who wish to build the future with us on Bitcoin."
The bill also features new agencies that will enforce securities law and protect the rights of digital asset holders and community members.
Bitfinex, a crypto exchange and the technology provider for the Bitcoin-backed "Volcano bond," revealed the details. They said the Volcano bond/ token would allow El Salvador to raise funds as a settlement for its sovereign debt.
Similarly, they will use the raised capital to finance the construction of a Bitcoin city and set up mining infrastructure.
The developers estimate that the bond should raise a target of $1 billion for the country. Hence, half of the raised capital will be deployed for building the special economic zone, the Bitcoin city.
The initial proposal states that the denomination of the tokenized bonds would be in US dollars. Similarly, the bond will have a ten-year maturity date with an annual interest rate of 6.5%.
Furthermore, the Volcano descriptor for the bonds emanates from the location of El Salvador's Bitcoin city. There are expectations that the crypto city will become a renewable crypto mining hub and be powered by hydrothermal energy. The energy will be generated from the nearby Conchagua volcano.
According to Bitfinex, the city would be a special economic zone similar to China. The Bitcoin City will offer tax incentives, crypto-friendly regulations, and other benefits for its residents and community members.
Industry players and crypto community members in El Salvador consider the newly passed legal framework for the Bitcoin-backed bond as landmark legislation. The country's legislative assembly approved the bill, which is expected to change crypto regulation in El Salvador.
You would recall that the bill was brought before El Salvador's legislative assembly in November. Almost three months later, 62 legislative assembly members supported the Bitcoin-backed bond.
According to the proposal, the digital securities bill will
establish the legal order that grants legal certainty to transfer operations with any title of virtual assets that are used in the issuance of public offerings carried out in the country."
Asides from the bill expanding crypto regulations in El Salvador, the bill will significantly facilitate the issuance of "Volcano bonds."
Furthermore, the bill covers the creation of a national digital assets commission. This body will serve as the regulatory agency and the promoter of the crypto market in the country. Similarly, the digital securities bill will enable El Salvador to establish a Bitcoin Fund Administration Agency.
This agency will be responsible for the administration, safeguarding, and investment of funds from public offerings of digital assets done by the Salvadoran State." In addition, the agency will manage the returns that come from the said offers."
Several pointers indicate that the El Salvador president is a Bitcoin Enthusiast. Recently, President Nayib Bukele said he would continue to buy BTC. His confidence in the digital asset is so high that he vows to buy one BTC daily. He once dismissed a Bloomberg report as "full of lies" — the report labeled his Bitcoin experiment as a failure.
Even though the experiment has continued to generate criticisms amidst the unrest in the country in recent times, President Bukele seems undeterred and remains bullish on Bitcoin. Similarly, the Government has continued to advocate for increased Bitcoin education.
The President Bukele-led Government wants schools to teach students about Bitcoin and its workings.
Furthermore, an industry player and billionaire, Tim Draper, said that El Salvador has huge Bitcoin investments. With such crypto holdings, the country will become one of the world's richest nations.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.