El Salvador paves way for first sovereign blockchain bond as BTC breaks $21k ceiling ⋆ ZyCrypto

• The Volcano Bond is expected to raise $1 billion in government funding.
• It’s part of a larger digital currency adoption plan since El Salvador made BTC legal tender.

In 2021, the Republic of El Salvador announced that it would raise $1 billion through bitcoin bonds, also referred to as the volcano bonds, due to the use of renewable energy, including that generated from the country’s active volcanoes, to finance bitcoin mining.

The seemingly distant dream may soon become a reality after the Legislative Assembly of Salvador passed a law regulating the issuance of digital assets in addition to BTC. Although scheduled for last March, the legislative agenda was postponed for several reasons due to the bear market.

Dubbed the Digital Asset Issuance Securities Act, the bill provides a legal framework involving the issuance of digital assets and classifies other non-Bitcoin cryptocurrencies – including tokenized securities, alternative coins and their virtual asset service providers (VASPs).

El Salvador Creates a Bitcoin Fund Management Agency

The 33-page legislation – now awaiting presidential assent – ​​includes the creation of a Bitcoin Fund Management Agency to oversee public offerings of digital assets in El Salvador. Within the framework, the Volcano Bond is also referred to as the Volcano token, aimed at helping El Salvador raise capital to repay national debt, finance Bitcoin mining infrastructure and create a Bitcoin City.

According to President Nayib Bukele, Bitcoin City will be a special economic zone located in the southern coastal city of El Salvador, with benefits for investors – such as tax breaks and business incentives.

Sixty-two lawmakers supported the bill against sixteen who voted against it in the country’s legislature, largely dominated by Bukele’s political party, Nuevas Ideas. The digital asset bill was introduced in November 2022. According to the announcement, the crypto exchange Bitfinex will be the technology provider for the bond.

Meanwhile, the bitcoin-loving country – which has also used the flagship crypto as legal tender since 2021 – recently appointed the National Bitcoin Office (ONBTC) to manage the country’s Bitcoin projects and the international cooperation for policy development with other countries. BTC changed hands for $21,157 at press time, representing a price change of +21% over the past week.