El Salvador continues its massive embrace of bitcoin by passing a bill that paves the way to create a legal structure for all cryptocurrencies.
The legislative framework for Bitcoin-backed bonds, known as “Volcano Bond,” will be used to reduce government debt and support the establishment of the planned “Bitcoin City” in the country.
The National Bitcoin Office of El Salvador (ONBTC) tweeted the news on January 11, stating that the law had been passed there.
Exactly one year after the unveiling of the plan, El Salvador’s Minister of Economy Maria Luisa Hayem Brevé proposed the move as the next step in achieving this goal.
The nation is now a step closer to creating crypto bonds as a result of the agreement.
El Salvador President Nayib Bukele with the laser eyes. Image from Nayib Bukele Twitter
El Salvador’s Ambitious Bitcoin Program
El Salvador became the first country to make bitcoin legal tender in September 2021, ordering all business enterprises to accept the cryptocurrency.
As part of the deployment, a government-issued digital wallet containing $30 worth of Bitcoins is available to Salvadorans.
Taxes can be paid in BTC in accordance with the law, and businesses must accept crypto unless they are technologically unable to do so.
The president of El Salvador, Nayib Bukele, is a true believer in crypto. He has advocated accepting Bitcoin as a means to bring more Salvadorans into the formal economy, one-third of whom do not have a bank account.
Cover art/illustration via CryptoSlate
The volcano descriptor for the bond comes from the Bitcoin City site, which is slated to be a renewable crypto mining center powered by hydrothermal power from the nearby Conchagua volcano.
One of the objectives of the bond issuance is to invest 50% of the funds in cryptocurrencies and the remaining 50% in the infrastructure needed to expand the digital currency sector in the Central American country.
Crypto Bond Package: Citizenship in El Salvador
The tokenized bonds will be denominated in US dollars, have a 10-year maturity date, and earn 6.5% interest, based on initial plans. The bond should also allow the investor to acquire citizenship in the country.
ONBTC notes that this digital securities act provides “consumer protection against rogue actors in the ‘crypto’ area, and also firmly establishes that we are open for business to all those who choose to build their future with us in bitcoin.”
BTC total market cap at $348 billion on the daily chart | Chart: TradingView.com
As of writing, Bitcoin is trading at $18,113, up 7.5% in the last seven days, data from Coingecko shows.
Chart: Coingecko
Crypto legalization puts El Salvador on the world financial map. This new law furthers Bukele’s goals by laying the groundwork for a new Bitcoin-based global digital securities framework.
Meanwhile, Bitfinex reports that El Salvador’s Bitcoin City will be a special economic zone similar to China’s, which will provide tax incentives, crypto-friendly rules, and other incentives for crypto companies among them.