- The Congress of El Salvador expects to receive about 20 bills for regular bitcoin bonds in the near future.
- Finance Minister Alejandro Zelaya announced that the government is working on creating an adequate legal structure.
- The so-called ‘volcano bond’ will serve to finance the construction of the world’s first Bitcoin city.
The Minister of Finance of El Salvador, Alejandro Zelaya, announced that the government will send to the Legislative Assembly (Congress) about 20 bills that will serve as a regulatory framework for the issuance of bitcoin bonds, according to Reuters.
“(This is) to provide a legal structure and legal certainty to everyone who buys the bitcoin bond,” the minister explained during an interview on a local television channel.
Although the senior official did not clarify when these bills will be sent, it is expected to be soon due to the emphasis that the government of President Nayib Bukele has placed on the plans related to Bitcoin.
The government of the Central American country said that it is working on the development of legislation that provides an adequate legal basis for the issuance of the so-called Volcano Bonds. These papers will be issued by the State and will serve to capture liquidity for the financing of various infrastructure works.
One of the flagship projects that will be financed with these bonds is Bitcoin City. The construction of the first city in the world whose construction and economy will be based entirely on the largest cryptocurrency, will cost about 300,000 bitcoins.
The government hopes to raise 1,000 million dollars through the Volcano Bonds. The 10-year bond will have a coupon with a 6.50% annual yield in dollars. Bond interest payments are made to holders each January.
El Salvador signed an agreement with the Bitfinex Securities exchange platform to “create a regulatory framework for digital securities and assets” and the issuance and operation of digital financial instruments in that country.
On The Flipside
- Bitfinex, is the company in charge of issuing the bitcoin bonds of El Salvador. The iFinex subsidiary was fined and banned in New York for having concealed and supplied false financial data, according to a local media citing international sources.
- The Salvadoran Legislative Assembly is controlled by Bukele’s party, Nuevas Ideas.
Why You Should Care
Half of the funds obtained through the bond will be used for the development of the country’s mining infrastructure. The other half will be used by the government to buy more bitcoins, authorities reported last November.
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