El Salvador Passes Law Paving the Way for 'Volcano Bond'
The digital asset bill in the Legislative Assembly obtained 62 votes in favor and 16 against.
The Legislative Assembly of El Salvador approved on Wednesday a law for the issuance of digital assets other than bitcoin. Included in the legislation was a legal framework for the issuance of a bitcoin-backed bond, also known as the Volcano Bond.
In November 2021, El Salvador President Nayib Bukele announced that the Central American country – which earlier that year established bitcoin (BTC) as legal tender – was planning to raise $1 billion via bitcoin-backed bonds. The proposed paper soon became known as Volcano Bonds as the money was to go towards – among other things – seeding a bitcoin mining industry reliant solely on renewable energy, including that generated by the country's active volcanos.
Although initially planned for March 2022, the bond issuance had to be postponed several times, mostly due to last year's brutal bitcoin bear market. The digital assets bill was finally introduced in the Legislative Assembly at the end of November 2022, where Bukele's party, Nuevas Ideas, has a large majority. Sixty-two legislators voted for the law today, and 16 voted against.
In a statement released Wednesday, Bitfinex stated that it “will be an infrastructure provider for what it says should really be termed the "Volcano Token" – "a digital token which would help El Salvador to raise capital to pay down its sovereign debt, direct funds towards the creation of Bitcoin mining infrastructure, and fund the construction of 'Bitcoin City'."
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