El Salvador Passes Law to Issue Bitcoin-Denominated Bonds

• El Salvador has just approved a law to allow it to issue Bitcoin-denominated bonds.
• The law was passed by the Legislative Assembly of El Salvador with 62 votes in favor and 16 against.
• The National Bitcoin Office (ONBTC) of El Salvador will begin issuing the bonds soon.

The government of El Salvador has recently passed a law that will allow it to issue Bitcoin-denominated bonds, also known as Volcano Bonds. The bill was approved by the Legislative Assembly of El Salvador with 62 votes in favor and 16 against on January 11. The bill will be ratified by President Nayib Bukele soon and become law.

The National Bitcoin Office (ONBTC) of El Salvador, which is a specialized administrative unit for coordinating and consulting all Bitcoin-related projects in the country, announced the news on Twitter. It said that the law paves the way for issuing Volcano Bonds and that they will begin issuing them soon.

The law will enable the nation to issue bonds backed by Bitcoin, allowing it to raise funds from international investors. President Bukele initially announced Bitcoin-backed bonds in November 2021 with the intention to create the world’s first “Bitcoin City”. He plans to fund the development of the city, which will contain residential sections, commercial areas, museums, entertainment venues, an airport, railway, and other infrastructure, by raising $500 million through Bitcoin-backed bonds. The government also plans to raise another $500 million reserved for buying Bitcoin-denominated bonds.

The law will provide a framework for all digital assets that are not Bitcoin, as well as those issued on Bitcoin. It will also provide a legal structure for the issuance of Volcano Bonds, which will be based on the Salvadoran Colón and backed by Bitcoin. This could provide a new and innovative way for El Salvador to raise funds and attract investment from abroad.

The passage of this law marks a major milestone for El Salvador and is seen as a sign of the country’s commitment to innovation and the adoption of new technologies. It also signals the nation’s intention to become a regional leader in the digital asset space and could open the door to other countries seeking to issue similar bonds.