El Salvador prepares 20 bills to provide legal framework for Bitcoin bonds

President Nayib Bukele of El Salvador has made progress in plans to issue Bitcoin bonds. He prepared 20 bills to create a legal framework.

Alejandra Zelaya, Head of Treasury, stated to El Salvadoran media El Mundo that the bills would cover regulations regarding the issuing of securities as cryptocurrency in order to ensure the viability and viability of Bitcoin bonds. He stated:

“This is to provide legal structure and legal certainty for everyone who purchases the Bitcoin bond.”

He did not specify a deadline for legislation to be submitted.

The bond issuance’s $1 billion would be used for funding the Bitcoin City initiative, which President Bukele promised would provide “digital, technological education, geothermal power for the entire city, efficient and sustainable public transportation”

The Bitcoin City has a Bitcoin (BTC), mining operation that uses the geothermal power of a volcano to power its mining rigs. This is why the bonds are called “Volcano Bonds.” On October 1, 2021, the mining operation produced its first 0.00599179 Bitcoin.

The bond issue funds could be used to repay a $800 million Eurobond that will mature in January 2023. El Mundo was told by Zelaya that the country would need financial help to fulfill their obligation to repay the Eurobonds. These could be from Bitcoin bonds, or “institutional offers from different investment banks.”

“We can make payments in bitcoin and not create another Eurobond in the traditional Eurobond market. We can also find a bond in dollars that receives Bitcoin payment.”

A Eurobond is a tool that allows countries to borrow money in another currency than their own.

Zelaya indicated that investors are interested in the Bitcoin bond due to its exposure to BTC, and 10-year maturity at 6.5% interest.

Related: President Bukele predicts Bitcoin rally at $100K, legal adoption and other developments

However, the issuance of Bitcoin bonds will not prevent Central American nations from participating in traditional finance. Zelaya stated that “We aren’t going to abandon traditional finance.”

Blockstream, a blockchain developer, and iFinex (which is closely linked to stablecoin USDT) are notable partners in El Salvador’s creation of Volcano Bonds. Blockstream expects that the bonds will be issued via its Liquid Network, and processed by iFinex.

On Jan. 2, President Bukele tweeted his 2022 predictions, stating that “Bitcoin City” will begin construction and that “Volcano bonds are going to be highly subscribed.”

2022 predictions for #Bitcoin. *Will reach $100k. *2 additional countries will adopt it. *Will be a major electoral issue during the US elections this year. *Bitcoin City construction will begin *Volcano bonds are oversubscribed. *Huge surprise @TheBitcoinConf
— Nayib Buukele (@nayibbukele), January 2, 2022

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Eileen Wilson

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