The CTO of cryptocurrency exchange Bitfinex expects the much-awaited El Salvador bitcoin volcano bonds to be on the market between June and September this year after the country’s congress voted in favor of legislation that will provide the legal framework for the issuance of the bitcoin (BTC) backed bond.
Bitcoin volcano bonds set to go on the market
Speaking at the Paris Blockchain Week 2023, the chief technology officer of crypto exchange Bitfinex, Paolo Ardoino, hinted that El Salvador’s bitcoin-powered bonds known as volcano bonds will launch between June and September 2023.
Despite the numerous delays in the launch of the volcano bond since it was first announced by El Salvador’s president Nayib Bukele in November 2021, it looks like the bitcoin-friendly country will finally be able to issue tokenized bonds in a bid to raise funds to build a bitcoin city in the Central American country.
According to Ardoino in September 2022, the volcano bonds should have been available on the market in a couple of months but the issuance of these special bonds has been delayed more than a few times since it was first announced mostly due to the challenges experienced in establishing a suitable legal framework to facilitate its launch.
After months of deliberations and drafting of over 20 bills, the nation’s congress finally passed the “Digital Asset Issuance” legislation, meant to provide a legal framework for the issuance of bitcoin-backed bonds.
The new law not only applies to the issuance of bitcoin or bitcoin-related offerings but also to other digital assets including tokenized securities, altcoins, and stablecoins, giving legal coverage to businesses that use other cryptocurrencies for their transactions.
What are volcano bonds?
The volcano bonds are powered by a geothermal mining facility in El Salvador and are billed to raise over $1 billion in token sales to pay off the country’s debt, direct funds towards the creation of another bitcoin mining infrastructure, and fund the construction of “Bitcoin City”.
According to the nation’s president Nayib Bukele, the proposed Bitcoin City will be a well-structured economic zone that will be located at the Gulf of Fonseca on the southern coast of El Salvador, near El Salvador’s Conchagua volcano.
Bitcoin City would offer tax advantages, and friendly regulations, create mining infrastructure, and incentivize bitcoin businesses and entrepreneurs to open offices and startups in the country.
The Central American nation has been relentless in its efforts to become a mega bitcoin nation. The Government has continuously advocated for the adoption of cryptocurrencies in the country and even went as far as investing in BTC as an asset for the country.
The country’s affinity for bitcoin has also inspired other nations’ leaders to consider adopting the premier cryptocurrency as a legal tender. Last month, The president of the Republic of Senegal, Macky Sall, expressed interest in the government’s bitcoin policy in El Salvador, which he claimed has been bolstered by the use of bitcoin.
However, only some are sold on the idea of fully adopting bitcoin as a legal tender. The IMF raised concerns regarding the decision by El Salvador to recognize bitcoin as a legal tender, adding that the country’s decision raises several macroeconomic, financial, and legal issues.