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

The raft bills will help EL Salvador's government build the legal and financial framework for the $1 billion Bitcoin bond issue, known as volcano Bonds.

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

El Salvador's government, led by President Nayib Bukele, has moved ahead with plans to issue Bitcoin bounds by planning 20 bills designed to provide a legal structure to them. 

Head of the Treasury Alejandra Zelaya said EL Salvadoran media EL Mundo on Jan 4 that the bills will cover regulations about issuing securities as cryptocurrency to ensure the viability of the Bitcoin bounds that were proposed in Nov 2021.

"[This is] to provide a legal structure and legal certainty to everyone who buys the Bitcoin bond."

Anyway, he didn't propose a timeframe for the regulation to be submitted to administrators. 

The $1 billion looked for by the bond issuance would be utilized to support the Bitcoin city drive which President Bukele has promised will provide "Digital and technological education" geothermal energy for the entire city, and efficient and practical public transport."

One of the features of the Bitcoin City is a Bitcoin(BTC) mining process that harnesses the geothermal power created by a volcano to power the mining rigs-leading to the bounds being dubbed "Volcano Bonds." The mining operation mined its first 0.00599179 Bitcoin on Oct 1, 2021.

Funds from the bond issue could also be used to pay down an $800 million Eurobond issue which will mature in Jan 2023, Zelaya said EL Mundo that the nation would have to find financiers to help fill their obligation to pay off the Eurobonds which could come from Bitcoin bounds or from "Institutional proposals from different venture banks," rather than another Eurobond issue.

“We can simply make payments without creating another Eurobond in the traditional market, and we can find a bond that is denominated in dollars and receives payment in Bitcoin.”

A Eurobond is a debt for countries to bring assets up in a denomination other than its cash.

Zelaya also indicated that there is significant interest in the Bitcoin bond from investors as it offers exposure to BTC and a 10-year maturity of 6.5% interest.

The issuance of Bitcoin bonds would not however block the Central American country from participating in traditional finance, Zelaya said "We are not going to abandon the traditional market."

Remarkable partners with EL Salvador in the making of the Volcano Bonds include blockchain developer Blockstream and iFinex, which is firmly connected with Stablecoin Tether(USDT) The bonds are relied upon to be given on Blockstream's Network and processed by iFinex.

President Bukele tweeted his 2022 predictions on Jan 2 that "Bitcoin City will commence construction," and "Volcano bonds will be oversubscribed."

Read: El Salvador bought additional 21 Bitcoin to celebrate Dec. 21, 2021