El Salvador has passed a bill, with a majority vote for it, that will provide the legal infrastructure for a Bitcoin-backed bond to be used to pay sovereign debt.
The Bitcoin bond, known as the Volcano Bond, will also be used for the funding to build the “Bitcoin City” in the country. According to the legislative assembly, there were 62 votes for the bill with 16 against it. This is set to become law as soon as it is approved by the Bitcoin-proponent president Nayib Bukele.
The digital department in the government, the National Bitcoin Office of El Salvador, announced the bill in a thread on Twitter, opening that “El Salvador is Bitcoin country” and that Bitcoin is money and “everything else is a security”. This office was created as an official national government department in November 2022 as a department to oversee El Salvador’s domestic Bitcoin projects.
The Office pointed out that the legislation will pave the way for the Bitcoin-backed bonds to be issued and recognised in the country.
Today El Salvador builds on our first-mover advantage by passing landmark legislation establishing a legal framework for all digital assets that are not bitcoin. As well as those issued on bitcoin.
The law also paves the way for volcano bonds which we will soon begin issuing.
— The Bitcoin Office (@bitcoinofficesv) January 11, 2023
The technology underpinning the Volcano Bonds will be provided by the cryptocurrency exchange Bitfinex. The creation and issuance of these bonds will allow the country to generate capital using the Bitcoin-backed bonds which will be able to create mining construction for the digital currency industry as well as pay down its sovereign debt. According to a post released by Bitfinex:
“Bitfinex will be a technology provider for the nation’s Volcano Token, which is expected to move forward now that the new regulatory framework is in place. “