El Salvador approves important cryptocurrency law

El Salvador has passed landmark legislation establishing the legal basis for bitcoin-backed bonds. Dubbed a “volcanic bond,” it will be used to pay off the country’s debt and finance the development of “Bitcoin City.” The bill passed on 11 January with 62 votes in favor and 16 against and will no doubt be signed by President Bukele.

Law that paves the way for bonds backed by bitcoin

Volcano bonds or Volcano tokens will allow El Salvador to generate funds to pay off its sovereign debt. It will also support the development of Bitcoin City and create the infrastructure for Bitcoin mining. The information comes from the Bitfinex cryptocurrency exchange, which, in particular, is the technology provider for these bonds.

According to El Salvador, Bitcoin City in the country will become the mining hub for the renewable cryptocurrency. It will be powered by hydrothermal energy from the nearby Conchagua Volcano, hence the name “volcanic link”.

For Bitfinex, Bitcoin City would be a special economic zone much like China. This will provide tax breaks, as well as cryptocurrency-friendly laws and other incentives to create a bitcoin business.

El Salvador on its way to becoming a major financial center

Half a billion dollars, which is expected to be raised for the country through bonds, will be spent on building a special economic zone. The bond issue will be in US dollars. According to the original offer, they will have a maturity of 10 years and an annual interest rate of 6.5%.

Samson Moe, a bitcoin advocate who worked on the creation of the Volcano token, made the announcement. According to him, the adoption of the bill can help turn the country into a major financial center.

In addition to those issued for bitcoin, El Salvador’s bill also establishes the legal basis for all other non-bitcoin digital assets. It is also creating a new regulatory body that will enforce securities laws and protect against fraudsters.

Overall, Bitcoin’s fall was not enough to discourage El Salvador. The country, more than ever, wants to make this currency the centerpiece of its development.

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Eddie Senga avatar
Eddie Senga

The world is changing and adaptation is the best weapon to survive in this changing universe. As a crypto community manager at the base, I am interested in everything that is directly or indirectly related to the blockchain and its derivatives. To share my experience and talk about a field that fascinates me, there is nothing better than writing informative and laid-back articles at the same time.

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