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

This series of bills will help the El Salvadoran government establish a legal and financial framework for the issuance of $1 billion in Bitcoin bonds (the so-called “volcano bonds”).

Under the leadership of President Nayib Bukele, the government of El Salvador has advanced the plan to issue Bitcoin ( BTC ) bonds and prepared 20 bills to provide a legal framework for it.

The head of the Ministry of Finance, Alejandro Zelaya, told Salva Multimedia’s Le Monde on Tuesday that these bills will cover regulations regarding the issuance of securities as cryptocurrencies to ensure the feasibility of the Bitcoin bond proposed in November 2021. He said:

“This is to provide a legal framework and clarity to everyone who buys Bitcoin bonds.”

However, he did not propose a timetable for submitting the legislation to legislators.

The US$1 billion sought by the bond issuance will be used to fund the Bitcoin City initiative, and President Bukele promised to provide “digital and technical education, geothermal energy for the entire city, and efficient and sustainable public transportation.”

One of the characteristics of Bitcoin City is the Bitcoin mining operation, which uses the geothermal heat generated by the volcano to power the miners-making the bond known as the “volcano bond”. This business dug out 0.00599179 BTC for the first time on October 1, 2021.

Funds from the issuance of bonds can also be used to repay US$800 million in European bonds due in January 2023. Zelaya told Le Monde that the country will need to find financiers to help it meet its obligations to repay Eurobonds, which may come from Bitcoin bonds or “institute quotations from various investment banks,” rather than issuing Eurobonds again.

“We don’t need to issue Eurobonds again in the traditional market to complete the payment. We can find a bond denominated in U.S. dollars that accepts Bitcoin payments.”

Eurobonds are debt instruments used by countries to raise funds in non-national currencies.

Zelaya also hinted that investors have great interest in Bitcoin bonds because it provides exposure to BTC and a 10-year product with an interest rate of 6.5%.

However, the issuance of Bitcoin bonds does not prevent this Central American country from participating in traditional finance. Zelaya said: “We will not abandon the traditional market.”

El Salvador’s well-known partners in issuing volcano bonds include blockchain developers Blockstream and iFinex, the latter being closely related to the stable currency Tether (USDT). These bonds are expected to be issued on Blockstream’s Liquid Network and processed by iFinex.

On Sunday, Bukele posted a forecast for 2022 on Twitter, stating that “Bitcoin City will begin construction” and “Volcano Bonds will be oversubscribed”.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/el-salvador-prepares-20-bills-to-provide-a-legal-framework-for-bitcoin-bonds/
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