Bitcoin Bond Bill Drafting: El Salvador – Cryptocurrency Policy Exploring

Bitcoin Bond Bill Drafting: El Salvador - Cryptocurrency Policy Exploring

El Salvador’s government will submit about 20 bills involving financial markets and securities investment to Congress to provide laws for the issuance of bitcoin bonds, El Salvador’s Finance Minister Alejandro Zelaya said on Tuesday (January 4). Base. The 35-year-old Salvadoran politician Zelaya is quite popular. As a Twitter influencer – the current Minister of Finance of El Salvador President Ibu Bukele (Nayib Bukele), Zelaya should be the “Bitcoin” this time. Lead drafter of the Bond Act. “(The bill) provides a legal framework for everyone who buys bitcoin bonds, as well as guarantees their legal certainty ,  he said in an interview .

Zelaya said the government had already begun drafting the bill after El Salvador announced in November that it was preparing to issue bitcoin bonds. El Salvador’s November plan revealed that its first bitcoin bond offering this year, called the “Volcano Bond” program, would issue $1 billion worth of bonds with a 6.5 percent coupon. Half of the funds raised will be used to build infrastructure, and the rest will be used to buy more bitcoins.

Bitcoin Bond Bill Drafting: El Salvador - Cryptocurrency Policy Exploring

As the first country in the world to use cryptocurrencies as legal tender, El Salvador has launched the “Bitcoin Bond Act” to guide the circulation of the Bitcoin bond market by guaranteeing legal certainty. It is obviously exploring a new path. Combining proper regulation with a decentralized cryptocurrency , the Bitcoin Bonds Act is one step in El Salvador’s cryptocurrency regulatory framework.

Since Bitcoin is inherently anonymous and decentralized, there is no possibility that any country can achieve complete supervision. An unregulated and convertible currency will cause the loss of national wealth assets and shake the national legal currency. Such harm is natural No major power will recognize its existence. And El Salvador, from the recognition of bitcoin as legal tender, the launch of the electronic wallet Chivo, to the current “Bitcoin Bond Act”, why is it so firm to promote the exploration of bitcoin-related monetary policy? In fact, in the context of the unlimited monetary easing policy of the United States, the United States printed $3 trillion in three months during the epidemic, which is equivalent to directly plundering more than 10% of the wealth. There really isn’t much room for monetary policy choices for a small country like El Salvador. Great powers do not need cryptocurrencies because they themselves have the ability to control currency issuance, stabilize prices, and fight against the currencies of other great powers. Some small countries, such as Zimbabwe and Venezuela, have insufficient national strength and limited government capacity to control prices. In fact, most countries in South America and Africa are facing this problem, but to different degrees. In some of them, the monetary system has already collapsed, and they can only watch the people abandon their national currencies and use the US dollar instead. And even if a country as large as Turkey can never be called a small country, foreign exchange, bond market, and stock market will all experience circuit breakers in 2021. In particular, the stock market has set a record of seven circuit breakers in four days. In 2021, the Turkish lira will depreciate by 44%, almost Cut in half. How can El Salvador resist the harvest of the US dollar with its own national strength? In fact, as early as 2001, due to the vicious devaluation of the original legal currency, the krona, El Salvador decided to adopt the US dollar as the official currency. in a state of complete abandonment. Judging from the current situation, the use of Bitcoin cannot completely escape the influence of the great powers, but at least it will not be at the mercy of only one great power.

El Salvador’s bitcoin bonds will be issued by Blockstream, a bitcoin infrastructure company that has been helping the Lightning Network, a second-layer solution that helps make bitcoin transactions faster and cheaper, expand in the country. The Lightning Network allows users to send fast and low-cost transactions through its payment channels. Unlike Bitcoin-based layers, the Lightning Network enables nodes to follow possible transaction paths through an “off-chain” process known as “gossip and probing.” The lightning network system may be suitable for ordinary people’s daily small-value transactions without having to go to the bitcoin main chain. Compared with the traditional bitcoin chain transactions, it has the characteristics of faster and lower fees. The specific principle is: transaction Both parties pledge part of the funds to a multi-signature address, and the funds need to be issued by both parties at the same time. In the Lightning Network, the transaction process between the two parties will not be recorded on the chain, only the final result, that is, a transaction will be recorded in the main chain, which is equivalent to only needing to queue up once, which greatly reduces the process and procedures of on-chain accounting fee. If this scheme is adopted, in essence, a set of national digital currencies based on Bitcoin may be established, which is not equivalent to Bitcoin.

The drafting of the “Bitcoin Bond Act” is only one step in the exploration of El Salvador’s cryptocurrency policy. Whether it can effectively regulate the order of the Bitcoin bond market through legislation and corresponding technical means after its launch is still an experiment in essence.

Posted by:CoinYuppie,Reprinted with attribution to:
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