El Salvador Issues World’s First Bitcoin-Backed Bonds – Volcano Bonds

El Salvador Issues World’s First Bitcoin-Backed Bonds – Volcano Bonds

• El Salvador has recently passed a law that allows its government to issue Bitcoin-denominated bonds, also known as Volcano Bonds.
• The National Bitcoin Office (ONBTC) of El Salvador is in charge of overseeing and consulting all Bitcoin-related projects in the country.
• President Nayib Bukele has stated his plans to fund the development of a Bitcoin City by raising $500 million through Bitcoin-backed bonds.

The Legislative Assembly of El Salvador recently passed a digital securities law that would allow the nation to issue Bitcoin-backed bonds, also known as Volcano Bonds. The bill was approved by 62 votes to 16 on January 11 and will become law once ratified by President Bukele. This groundbreaking legislation would mark the first time a nation has ever issued Bitcoin-denominated bonds.

The National Bitcoin Office (ONBTC) of El Salvador has also announced the news, saying they will soon begin issuing the bonds. The ONBTC is a specialized administrative unit tasked with coordinating and consulting all Bitcoin-related projects in the country.

President Nayib Bukele initially announced bitcoin-backed bonds in November 2021 along with plans to establish the world’s first „Bitcoin City.“ He plans to use the funds raised from the bonds to build the city in the southeastern district of La Unión. The city will contain residential sections, commercial areas, museums, entertainment venues, an airport, railway, and other essential infrastructure. It will be designed in a circular shape to resemble a giant coin.

In addition, the government has also earmarked an additional $500 million to buy Bitcoin. If the value of Bitcoin appreciates, the bondholders will benefit from the appreciation. This move is part of Bukele’s long-term vision to make El Salvador the world’s first Bitcoin-friendly nation.

The issuance of Bitcoin-backed bonds by El Salvador represents a significant milestone in the cryptocurrency industry, as it marks the first time a nation has ever issued bonds denominated in Bitcoin. This could potentially pave the way for other countries to issue their own digital assets, further increasing the acceptance of digital currencies and blockchain technology.