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El Salvador's New Draft Law Creates the Foundation for Bitcoin Volcano Bonds

Photo by Shawn Appel / Unsplash

El Salvador's Bitcoin volcano bonds have made a significant advancement toward the issue. A measure on digital securities was submitted yesterday (1) by the Salvadoran Congress after the initiative experienced delays.

What's changed?

Volcano bonds backed by Bitcoin are now possible thanks to El Salvador, the first nation to use it as legal cash. In November of last year, El Salvador's President Najib Bukele unveiled the initiative to draw cash and investors. The BTC bonds, dubbed after the mining operation's energy source, the Colchagua volcano, will raise $1 billion per President Bukele's objectives. Then, that billion will be divided in half.

BTC (2) will receive half of the investment directly, and the remaining 500 million will be used to support and create to Build the necessary electricity and mining infrastructure as well as Bitcoin City. The enormous Bitcoin City project is anticipated to draw in overseas investors. The phrase "Bitcoin City aims to become the Singapore of the West" further indicates that the goals are not understated. In the city, there will only be a 10% value-added tax. There will be no additional taxes. The adjacent volcano will supply dependable, sustainably produced electricity, which will not least support Bitcoin mining.

After five years, bond buyers will receive a return of 6.5 percent and the choice of fast-track citizenship. Once the original $500 million has been spent, additional revenues will be shared in half with investors as a Bitcoin dividend.

When do we see Bitcoin Volcano Bonds?

The bill, presented to the Salvadoran Congress yesterday, aims to establish regulations, so buyers of the bonds feel confident doing so. El Salvador will be able to serve as the financial hub of Central and South America thanks to the adoption of digital securities law, noted Paolo Ardoino, CTO of Bitfinex. The transactions will be handled by iFinex, the parent firm of Bitfinex and Tether, even though the bonds will be issued on Blockstream's commercialized Liquid Network. To carry out this issue, Bitfinex is anticipated to get a license in El Salvador.

According to the Salvadoran government, dividend payments will be distributed yearly using Blockstream's asset management platform. The measure must now be approved by Salvador's Congress, with President Bukele's Nuevas Ideas party conducting a vote. Comfortable legislative majorities A source close to the government claims that the measure will likely be enacted before Christmas. According to Paolo Ardoino, the release of the volcanic bonds should be anticipated two to three months from now. At the time of publication, Bitcoin was barely recovering. At $16,548, BTC faced a significant resistance area above $15.600.