El Salvador’s administration, led by President Nayib Bukele, has prepared 20 laws to provide a legal framework for the issuance of Bitcoin bonds.
The bills will assist El Salvador’s government in establishing the legal and financial framework for the Volcano Bonds, a $1 billion Bitcoin bond offering.
On Jan. 4, Treasury Secretary Alejandra Zelaya informed El Mundo in El Salvador that the laws will contain procedures for issuing securities in cryptocurrencies in order to assure the sustainability of the Bitcoin bonds planned in November 2021. He stated,
“[This is] to provide a legal structure and legal certainty to everyone who buys the Bitcoin bond.”
He did not, however, establish a deadline for the legislation’s submission to parliamentarians.
President Bukele has vowed that the $1 billion raised from the bond offering will be used to fund the Bitcoin City plan, which will provide “digital and technology education, geothermal energy for the entire city, and efficient and sustainable public transportation.”
A Bitcoin (BTC) mining business that uses the geothermal power generated by a volcano to power the mining rigs is one of the Bitcoin City’s characteristics, earning the bonds the nickname “Volcano Bonds.” On October 1, 2021, the mining operation mined its first 0.00599179 Bitcoin.
The proceeds from the bond sale could be to repay a $800 million Eurobond that will due in January 2023.
So, Instead of issuing another Eurobond. Then, Zelaya told El Mundo that the country would need to find financiers to help them meet their obligations. Of course, to pay off the Eurobonds, which might come through Bitcoin bonds or
“institutional bids from various investment institutions.”
“We can simply make payments without creating another Eurobond in the traditional market,”
“and we can find a bond that is denominated in dollars and receives payment in Bitcoin.”
A Eurobond is a debt instrument that allows countries to raise financing in a currency other than their own.
Investors are showing interest in the Bitcoin bond, according to Zelaya, since it provides exposure to BTC. Then, and has a 10-year maturity with a 6.5 percent interest rate.
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