El Salvador Plans Legal Framework For Bitcoin Bonds
On Jan. 4, El Salvador’s finance minister, Alejandro Zelaya, announced that around 20 bills will be sent to congress. The purpose of them is to provide legal certainty and a framework for Bitcoin Bond issuance and securities in crypto assets.
Zelaya did not specify any details regarding the proposed legislation when he made the announcement on local television according to Reuters.
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“(This is) to provide a legal structure and legal certainty to everyone who buys the bitcoin bond,”
Building Bitcoin City
President Bukele announced the Bitcoin Bonds in November as part of a drive to raise $1 billion for the Central American country. Half of the funds raised through bond issuance will go towards buying more BTC, while the remainder will be channeled into the construction of Bitcoin City.
The project will be located in the country’s eastern region of La Union where it would be able to access geothermal power from the Conchagua volcano.
This power will also be channeled into Bitcoin mining operations to generate more digital assets for the state stash. Industry observers have noted that the currently wasted geothermal energy could transform El Salvador into one of the largest Bitcoin miners in the hemisphere.
The “volcano bonds” will pay a yield of 6.5% and enable fast-track citizenship for investors. The new city is aiming to further attract investment through incentives such as zero income, capital gains, or property taxes. It also claims to be completely carbon neutral, deriving all of its energy from the neighboring volcano.
Blockstream chief strategy officer Samson Mow, who is the architect of the volcano bonds, commented that a “zero tax on everything” development zone will transform El Salvador into the “Singapore of Latin America.”
The 10-year bond which reaches maturity in 2032, carries a coupon of 6.5%. While Mow admitted this novel sovereign security is far more popular with Bitcoin investors than the general investing public, he suggested institutions “starving for yield” will snap up the bonds. https://t.co/eS2dmGLjA1
— Samson Mow (@Excellion) January 4, 2022
In a related development, El Salvador’s forward-thinking President has been widely praised by the crypto community and beyond for taking a proactive approach to Covid-19. On Jan. 4, the government released a video encouraging citizens to eat healthier, get out, and get fitter to help combat the virus as opposed to remaining in lockdown.
Bukele’s Big BTC Predictions
On Jan. 2, President Bukele made a number of bullish predictions for Bitcoin including a $100,000 price target. He also said that the volcano bonds will be oversubscribed and at least two more countries will adopt Bitcoin as legal tender in 2022.
Bitcoin was made legal tender in El Salvador on Sept. 7, however, the asset has retreated almost 12% in price since then.