The Salvadoran legislature has approved legislation that will allow for the issuance of bitcoin bonds proposed by President Nayib Bukele.
El Salvador was planning to issue a billion dollars worth of bonds on Blockstream’s Liquid Network, a federated Bitcoin sidechain, back in November 2021. Half of the proceeds from the bond sale would be invested in bitcoin, with the other half going toward the development of Bitcoin infrastructure in the Central American country. There was a statement made at the time that said the bonds would allow investors a fast track to citizenship and earn 6.5%.
The official statement released by El Salvador’s Bitcoin Office in response to the vote stated that:
“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. The law also paves the way for the volcano bonds which we will soon begin issuing.”
Overall, El Salvador’s Minister of the Economy Maria Luisa Hayem Brevé presented the measure that was voted on today to the country’s legislative assembly as the next step towards this plan exactly one year after it was announced that the plan would be implemented. With this approval, the nation has moved a significant step closer to realizing the potential of the bitcoin bonds.
How Was El Salvador’s Digital Security Bill Introduced?
El Salvador’s Minister of the Economy, Maria Luisa Hayem Breve, introduced the bill in the National Congress. According to the 33-page draft document acquired by CoinDesk, the law proposes to establish a National Digital Assets Commission that would oversee the regulation of digital asset issuers, service providers, and other players in the “public offering process” of digital assets.
Under President Nayib Bukele’s leadership, the Central American nation became the first in the world to recognize bitcoin as legal cash in 2021. Bukele has already doubled down on the contentious action by declaring intentions to raise $1 billion via bitcoin-backed bonds, and he has been buying up crypto during price falls and openly arguing with the International Monetary Fund while it cautioned the nation to rescind its decision.
El Salvador’s Finance Minister Alejandro Zelaya has blamed the conflict in Ukraine and Russia for the delay in the sale of “volcano bonds,” which had been scheduled for March.
If the proposed regulations are enacted into law, a Bitcoin Fund Management Agency will be required to be established to manage, protect, and invest “funds from public offerings of digital assets carried out by the State of El Salvador and its autonomous institutions.”
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