El Salvador Enacts Crypto Bill to Facilitate Bitcoin-backed Bonds
El Salvador is set to establish a regulatory body after the legislative authority passed the Digital Asset Issuance (DAI) bill. The landmark legislation passed on January 11 is awaiting ratification by President Bukele.
The DAI legislation targets regulatory clarity by harmonizing the legal framework for all digital assets. Besides delivering a legal framework for the regulatory body, the crypto bill has outlined a platform for the Bitcoin-backed bond. El Salvador aims to leverage the Volcano Bond in settling its sovereign debts. The 62 parliamentarians that voted for the crypto bill indicated that the Volcano Bond would facilitate the country’s funding of Bitcoin City.
Crypto Bill Supporting Bitcoin-backed Bonds
Confirming the bill’s passage, the National Bitcoin Office (NBO) lauded the input of parliamentarians via a January 11 tweet. The NBO confirmed it would kickstart issuances of the Volcano Bonds.
In support of the landmark legislation, Bitfinex crypto exchange confirmed being the technology provider for the Volcano Bonds. It admitted that the Volcano Tokens would ease the process of raising capital El Salvador can utilize to pay off sovereign debt. Bitfinex echoed parliamentarians’ perspective that the issuance of Volcano Tokens will expedite funding of the Bitcoin City construction. The crypto exchange lauded the bill to ease the funding of the country’s Bitcoin mining infrastructure.
Incentivizing Bitcoin-Oriented Business
Explaining the bitcoin-backed bond for El Salvador, Bitfinex revealed the volcano tokens are named after the Bitcoin City’s location. In particular, Bitfinex identified that President Bukele plans to transform the city into a renewable crypto-mining hub. The city is setting the pace for powering the crypto-mining hub from renewable energy derived from the Conchagua volcano.
Bitfinex clarified that the Bitcoin City would feature special economic zones mirroring China. As such, El Salvador plans to advance crypto-friendly policies, tax holidays and incentivize Bitcoin-oriented businesses for residents.
Bitfinex’s representative reiterated El Salvador’s initial proposal to leverage the bonds in raising $1 billion. The tokenized bonds would carry a US dollar denomination with a 6.5% interest rate and a ten-year maturity date. The country projects to allocate half the proceeds to constructing the special economic zone.
Transforming El Salvador to a Global Financial Center
The passage of the crypto bill is stimulating support from Bitcoin proponent Samson Mow. Mow regarded the bill as a gateway to transforming El Salvador into a global financial centre.
Mow observed that the bill offers a futuristic legal framework that extends beyond Bitcoin. He illustrated the regulatory agency would harmonize the application of securities law to shield El Salvador residents from bad actors.
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