El Salvador Has Just Approved Law to Allow it to Issue Bitcoin Denominated Bonds
El Salvador’s congress has passed a digital securities law that would allow the nation to issue Bitcoin-backed bonds, also known as Volcano Bonds.
The Legislative Assembly of El Salvador approved the bill by 62 votes to 16 on January 11. The bill will become law after being ratified by President Bukele.
The National Bitcoin Office (ONBTC) of El Salvador, which is a "specialized administrative unit" tasked with coordinating and consulting all Bitcoin-related projects in the country, also announced the news on Twitter, noting that it would begin issuing the bonds soon. It said:
"Today El Salvador builds on our first-mover advantage by passing landmark legislation establishing a legal framework for all digital assets that are not bitcoin. As well as those issued on bitcoin. The law also paves the way for volcano bonds which we will soon begin issuing."
President Nayib Bukele initially announced bitcoin-backed bonds in November 2021 along with intentions to establish the world’s first “Bitcoin City." He plans to fund the development of the city by raising $500 million through Bitcoin-backed bonds.
According to the president, the city will contain residential sections, commercial areas, museums, entertainment venues, an airport, railway, and other critical infrastructure. It will be built in the southeastern district of La Unión and will have a circular shape to resemble a giant coin.
The government also plans to raise another $500 million reserved for buying Bitcoin, with any appreciation in the digital currency ultimately shared with bondholders.
Notably, despite plans to launch Bitcoin-backed bonds over a year ago, Bukele has been forced to delay their issuance due to “economic instability stemming from the war between Russia
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