El Salvador prepares 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
bonds
by
preparing
20
bills
designed
to
provide
a
legal
framework
for
them.

Head
of
the
Treasury
Alejandra
Zelaya
told
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
bonds

that
were
proposed
in
Nov.
2021.
He
said:

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

However
he
did
not
propose
a
timeframe
for
the
legislation
to
be
submitted
to
lawmakers.

The
$1
billion
sought
by
the
bond
issuance
would
be
used
to
fund
the

Bitcoin
City
initiative

which
President
Bukele
has
promised
will
provide
“digital
and
technological
education,
geothermal
energy
for
the
entire
city,
and
efficient
and
sustainable
public
transport.”

One
of
the
features
of
the
Bitcoin
City
is
a
Bitcoin
(BTC)
mining
operation
that
harnesses
the
geothermal
power
generated
by
a
volcano
to
power
the
mining
rigs

leading
to
the
bonds
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
told
El
Mundo
that
the
country
would
need
to
find
financiers
to
help
fill
their
obligation
to
pay
off
the
Eurobonds
which
could
come
from
Bitcoin
bonds
or
from
“institutional
offers
from
various
investment
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
tool
for
countries
to
raise
funds
in
a
denomination
other
than
its
own
currency.

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.



Related:




President
Bukele
predicts
Bitcoin
rally
to
$100K,
further
legal
adoption
and
more

The
issuance
of
Bitcoin
bonds
would
not,
however,
preclude
the
Central
American
nation
from
participating
in
traditional
finance.
Zelaya
said
“We
are
not
going
to
abandon
the
traditional
market.”

Notable
partners
with
El
Salvador
in
the
creation
of
the
Volcano
Bonds
include
blockchain
developer
Blockstream
and
iFinex,
which
is
closely
related
to
stablecoin
Tether
(USDT).
The
bonds
are
expected
to
be
issued
on
Blockstream’s
Liquid
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.”

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