The legal basis for all digital assets will be established and a regulatory body will be established under the “Digital Asset Issuance” Act.
The projected “Bitcoin City” in El Salvador would be funded in part by the selling of a Bitcoin-backed bond, which the country’s lawmakers have just passed historic legislation to establish.
The measure was approved on January 11 with 62 votes in favour and 16 against. It will officially become law if it is confirmed by President Bukele.
The Volcano Bond, or Volcano Tokens, would enable El Salvador to generate funds for the reduction of government debt, the building of Bitcoin City, and the establishment of Bitcoin mining infrastructure, as stated by Bitfinex, the bond’s technology supplier.
Bonds are named after the nearby Conchagua volcano because of its association with Bitcoin City, which will use the volcano’s hydrothermal energy to create a sustainable crypto-mining centre.
According to Bitfinex, the city would be a special economic zone like those in China, providing people with favourable tax treatment, crypto-friendly rules, and other incentives to operate Bitcoin companies.
The government hopes to raise $1 billion from the bonds, of which $500 million will go toward creating the Special economic zone.
The proposed tokenized bonds were to be issued in U.S. dollars, mature in 10 years, and pay interest at a rate of 6.5% per year.
The bill’s approval, according to Bitcoin advocate and Volcano Token developer Samson Mow, might help convert the nation into a “major” financial centre, as reported by Cointelegraph.
To convert El Salvador into a major financial hub, it is essential that the government approve a new Digital Securities Law that would allow for the issuance of innovative financial products like Bitcoin Bonds.
In addition to covering Bitcoin-based digital assets, the measure establishes a legal framework for all digital assets and establishes a new regulatory body to enforce securities law and safeguard investors.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.