El Salvador Passes Landmark Bill on Bitcoin-Backed Bonds

El Salvador passes bill on Bitcoin-backed bonds and it will soon be a Law

With 62 votes in favor and 16 votes against it, the Legislative Assembly of El Salvador passed the Volcano Bonds bill on January 11; the bill would become law once President Bukele ratifies it. They would allow El Salvador to raise capital to pay for its sovereign debt and fund the building of the Bitcoin City

Note that the term Volcano Bonds is inspired by the location of El Salvador's Bitcoin City, which is slated to develop into a hub for renewable cryptocurrency mining powered by hydrothermal energy from the nation's active volcanoes. The Central American nation revealed its intentions to raise US$1 billion with bonds backed by bitcoin in November 2021. These bonds' first release date was set for March 2022. Due to the terrible crypto winter that has been going on since last year, it has to be delayed multiple times. It should be emphasized that according to their first plan, these bonds would have a 10-year maturity date, be issued in US dollars, and have an interest rate of 6.5 percent annually.

What would Bitcoin City offer?

According to Bitfinex, a well-known cryptocurrency exchange and the company that provided the Volcano bonds with their technology, the issuance of bonds backed by bitcoin would enable El Salvador to raise money to pay off its sovereign debt, finance the construction of Bitcoin City, and contribute to the development of the Bitcoin mining industry. Furthermore, according to the exchange, the projected Bitcoin City would be a special economic zone like those in China. They would provide tax benefits, crypto-friendly rules, and incentives for residents to start Bitcoin businesses.