El Salvador, which is considered the epicenter of Bitcoin adoption has passed “Digital Asset Issuance” legislation to create a regulatory body and establish a legal framework for digital assets.
The bill was passed on January’11, 2023, after which the National Bitcoin Office in the country announced the legality of the bill and observed it as the groundwork for issuing the bonds soon. The legislation aims to provide the legal framework for popular Bitcoin–backed bonds called Volcano bonds.
Further, it is planned to be used for paying down the sovereign debt and funding the construction of its earlier declared “Bitcoin City”. As per the tweet from “The Bitcoin Office, “the first of the volcano bonds will set the pathway for a new monetary revolution.
Bitfinex, the crypto exchange which is also a technology provider for the Volcano Bonds/ Tokens state that besides paying sovereign debt and funding the construction of Bitcoin City, the raised capital would also be used for creating Bitcoin mining stations in the country. The Bitfinex further indicates that the city would be a special economic zone, just like China which offers tax advantages and crypto–friendly regulations to incentivize the Bitcoin business for the residents of the country.
Furthermore, the volcano descriptor for introducing the bonds would be derived from the same city where “Bitcoin City” is planned to be located. Thus, El Salvador is all set to become the renewable crypto mining hub which will be powered by hydrothermal energy nearby the Conchagua volcano. The bonds are targeted at raising $1 billion to support the plan.
It is reported that the initial proposal for the tokenized bonds would be denominated in USD for the ten–year maturity, carrying an annual interest of 6.5%. Thus, through this new law, El Salvador plans to transform itself into a major financial center of the world.