The raft of bills can facilitate El Salvador’s government establish the legal and money framework for the $1 billion Bitcoin bond issue, called Volcano Bonds
El Salvador’s government, LED by President Nayib Bukele, has affected ahead with plans to issue Bitcoin bonds by preparing 20 bills designed to produce a legal framework for them.
Head of the Treasury Alejandra Zelaya told El Salvadoran media El Mundo on January. four that the bills can cover rules about issuing securities as cryptocurrency to confirm the viability of the Bitcoin bonds that were planned in November. 2021. He said:
"[This is] to provide a legal structure and legal certainty to everyone who buys the Bitcoin bond."
However he didn't propose a timeframe for the legislation to be submitted to lawmakers.
The $1 billion wanted by the bond issue would be used to fund the Bitcoin town initiative that President Bukele has secure can give “digital and technological education, heat for the entire town, and economical and property transport.”
One of the options of the Bitcoin town may be a Bitcoin (BTC) mining operation that harnesses the energy power generated by a volcano to power the mining rigs — resulting in the bonds being dubbed "Volcano Bonds." The mining operation mined its first 0.00599179 Bitcoin on October. 1 2021.
Funds from the bond issue might even be used to pay down an $800 million Eurobond issue which is able to mature in January. 2023. Zelaya told El Mundo that the country would wish to seek out financiers to help fill their obligation to pay off the Eurobonds that might return from Bitcoin bonds or from “institutional offers from varied investment banks,” instead of another Eurobond issue.
“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 could be a debt tool for countries to boost funds in a denomination aside from its own currency.
Zelaya conjointly indicated that there's vital interest within the Bitcoin bond from investors because it offers exposure to BTC and a 10-year maturity of 6.5% interest.
(Brian Newar, Cointelegraph, 2022)