Home Crypto El Salvador Wants To Make 20 Laws For Bitcoin Bonds

El Salvador Wants To Make 20 Laws For Bitcoin Bonds

The set of laws will help the government of El Salvador establish the legal and financial framework for issuing $1 billion Bitcoin bonds known as Volcano Bonds.

Instrument to finance Bitcoin city

The government of El Salvador, led by President Nayib Bukele, now has plans to issue Bitcoin bonds. This is accomplished by drafting 20 laws designed to provide a legal framework. Head of the Treasury, Alejandra Zelaya, said:

“The laws will cover regulations on issuing securities as cryptocurrency to ensure the viability of the Bitcoin bonds proposed in November 2021. This is to provide legal structure and legal certainty to anyone buying a Bitcoin bond.”

However, he did not propose a deadline for introducing the legislation to the legislators.

The $1 billion from the bond issuance would be used to fund the Bitcoin City initiative. President Bukele has pledged that this will provide “digital and technology education, geothermal energy for the entire city, and efficient and sustainable public transportation.”

One of the features of the Bitcoin City is a Bitcoin mining cooperative that uses the geothermal energy generated by a volcano to power the mining platforms. This is where the name “Volcano Bonds” comes from for the bonds. The mining operation mined its first 0.00599179 Bitcoin on October 1, 2021.

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Payoff of the Eurobond issuance

Funds from the bond issuance can also be used to pay off an $800 million Eurobond issuance maturing in January 2023. Zelaya said the country needed to find financiers to help pay off the Eurobonds.

“We can easily make payments without creating a new Eurobond in the traditional market. We can also find a bond denominated in dollars that is paid in Bitcoin.” According to Zelaya.

A Eurobond is a debt instrument for countries to raise money in a currency other than their own.

Zelaya also indicated that there is significant interest in the Bitcoin bond from investors. This is because it offers exposure to BTC and a 10-year maturity at 6.5% interest.

However, issuance of Bitcoin bonds would not prevent El Salvador from participating in traditional financing. Zelaya said they are not going to leave the traditional market.

Notable El Salvador partners in the creation of the Volcano Bonds include blockchain developer Blockstream and iFinex, which is closely related to stablecoin Tether (USDT). The bonds are expected to be issued on Blockstream’s Liquid Network and processed by iFinex.

President Bukele tweeted his predictions for 2022 on January 2. He said Bitcoin City will begin construction and Volcano Bonds will be oversubscribed:

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