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El Salvador’s Volcano Bond gets regulatory approval, targets Q1 launch

December 12, 2023 Coin Telegraph

El Salvador passes landmark crypto bill, paving way for Bitcoin-backed bonds

January 12, 2023 Coin Telegraph

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The “Digital Asset Issuance” legislation will also create a regulatory body and establish a legal framework for all digital assets.

El Salvador has passed landmark legislation providing the legal framework for a Bitcoin-backed bond — known as the “Volcano Bond” — that will be used to pay down sovereign debt and fund the construction of its proposed “Bitcoin City”.

The bill passed on Jan. 11 with 62 votes for and 16 against, and is set to become law after it is ratified by President Bukele.

#Plenaria90 Con 62 votos a favor, creamos la Ley de Emisión de Activos Digitales. pic.twitter.com/g1poXwLoH3
— Asamblea Legislativa (@AsambleaSV) January 11, 2023

The National Bitcoin Office of El Salvador announced the passage of the bill in a Jan. 11 Twitter thread, noting that it would begin issuing the bonds soon.

3/ El Salvador is the epicenter of Bitcoin adoption, and thus, economic freedom, financial sovereignty, censorship resistance & unconfiscatable wealth.

When we issue the first of the volcano bonds, we will once again be blazing the path forward for this new monetary revolution.
— The Bitcoin Office (@bitcoinofficesv) January 11, 2023

According to crypto exchange Bitfinex, which is the technology provider for the bonds, the Volcano Bond — or Volcano Tokens — would allow El Salvador to raise capital to pay down its sovereign debt, fund construction of the Bitcoin City and create Bitcoin mining infrastructure.

The volcano descriptor for the bonds is derived from the location of the country’s Bitcoin City, which is set to become a renewable crypto-minin hub powered by hydrothermal energy from the nearby Conchagua volcano.

Bitfinex notes that the city would be a special economic zone similar to those seen in China, which would offer tax advantages, crypto-friendly regulations and otherwise incentivize Bitcoin businesses for its residents.

The bonds have been targeted to raise $1 billion for the country, with half of it going into building the special economic zone.

According to the initial proposal, the tokenized bonds would be denominated in U.S. dollars, have a ten-year maturity date and carry an annual interest rate of 6.5%.

Samson Mow, a Bitcoin proponent who has been involved in the development of the Volcano Token, told Cointelegraph that the bill’s passage could help turn the country into a “major” financial hub.

“The move to pass the new Digital Securities Law, and enable new instruments like the Bitcoin Bonds, will help El Salvador to pay off their existing debts and will be critical to transforming the country into a major financial center of the world.”

The bill also includes a legal framework for all digital assets that are not Bitcoin, in addition to those issued on Bitcoin, and creates a new regulatory agency that will be in charge of applying the securities law and providing protection from bad actors.

5/ The new legislation also creates the National Digital Assets Commission, the regulating agency in charge of applying the securities law and protecting the rights of digital asset purchasers as well as issuers in El Salvador, and of deterring fraudsters from operating here.
— The Bitcoin Office (@bitcoinofficesv) January 11, 2023

El Salvador seems to delay its ‘volcano bonds’ launch

March 21, 2022 Coin Telegraph

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The government has repeatedly announced that its “volcano bonds” would launch by March 20, but it has apparently failed to deliver.

Considering the absence of any official announcements, El Salvador’s government seems to have delayed the launch date of the so-called “volcano bonds.” Earlier, Salvadoran Finance Minister Alejandro Zelaya had been reassuring the public that the project would start by March 20.

Speaking on a local TV show on Friday, El Salvador’s finance minister once again announced that the launch of so-called “volcano bonds” should take place somewhere between March 15 and 20 — the same dates had been declared during his previous TV appearance in February. Albeit this time, Zelaya mentioned the unstable political situation in the world as one of the factors that could influence the planned timing.

The project of a coin-shaped “Bitcoin city” at the base of the Conchagua volcano was introduced by El Salvador’s president, Nayib Bukele, in November 2021. In Bukele’s vision, the construction of this new town with the crypto mining operations and minimal taxes would be financed by the issuance of $1 billion in bonds. These bonds, which have since become famous as “Bitcoin bonds” or “volcano bonds,” are supposed to last 10 years and pay 6.5% annual interest to their holders.

In December 2021, Samson Mow, chief strategy officer of Blockstream — El Salvador’s partner in the bond launch — revealed that the platform had already received $300 million worth of “soft commitments,” mostly from “Bitfinex whales.” Responding to Cointelegraph’s request in February, Fernando Nikolić, marketing director at Blockstream, assured that the company would make an announcement regarding the matter in Q1 2022.

As the Financial Times reported, the necessary legislation to launch the bond sale still didn’t pass through the Salvadoran parliament.

Cointelegraph sent the press request to the presidential administration of El Salvador. As Nikolić informed Cointelegraph, Blockstream doesn’t know about the new dates of the launch because Blockstream is not directly working with the country of El Salvador to offer EBB1.

“EBB1 will simply be issued on the Liquid Network, which is operated by members geographically distributed all over the world. Blockstream serves only as a technology provider. So, whenever they are ready, they will be able to issue the bond on Liquid the same way anyone else can.”

In the meantime, El Salvador’s neighboring nation Honduras could follow its lead to becoming the second nation in the world to officially accept Bitcoin (BTC) as a payment method. According to some sources, that follows from Honduran president Xiomara Castro’s claim that El Salvador shouldn’t be the only country “escaping dollar hegemony.”

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January 3, 2022 Bitcoin.com

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