{"id":5935,"date":"2022-11-23T03:32:06","date_gmt":"2022-11-23T03:32:06","guid":{"rendered":"http:\/\/ci02b104db80002605"},"modified":"2022-11-23T03:32:06","modified_gmt":"2022-11-23T03:32:06","slug":"el-salvador-submits-bitcoin-bond-bill","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/legal\/el-salvador-submits-bitcoin-bond-bill","title":{"rendered":"El Salvador Takes First Step To Issue Bitcoin Volcano Bonds"},"content":{"rendered":"
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El Salvador\u2019s Minister of the Economy Maria Luisa Hayem Brev\u00e9 submitted a digital assets issuance bill to the country\u2019s legislative assembly, paving the way for the launch of its bitcoin-backed \u201cvolcano\u201d bonds.<\/p>\n

First announced one year ago today<\/a>, the pioneering initiative seeks to attract capital and investors to El Salvador. It was revealed at the time the plans to issue $1 billion in bonds on the Liquid Network, a federated Bitcoin sidechain, with the proceedings of the bonds being split between a $500 million direct allocation to bitcoin and an investment of the same amount in building out energy and bitcoin mining infrastructure in the region.<\/p>\n

A sidechain is an independent blockchain that runs parallel to another blockchain, allowing for tokens from that blockchain to be used securely in the sidechain while abiding by a different set of rules, performance requirements, and security mechanisms. Liquid is a sidechain of Bitcoin that allows bitcoin to flow between the Liquid and Bitcoin networks with a two-way peg. A representation of bitcoin used in the Liquid network is referred to as L-BTC. Its verifiably equivalent amount of BTC is managed and secured by the network’s members, called functionaries.<\/p>\n

\u201cDigital securities law will enable El Salvador to be the financial center of central and south America,\u201d wrote<\/a> Paolo Ardoino, CTO of cryptocurrency exchange Bitfinex, on Twitter. <\/p>\n

Bitfinex is set to be granted a license in order to be able to process and list the bond issuance in El Salvador. <\/p>\n

The bonds will pay a 6.5% yield and enable fast-tracked citizenship for investors. The government will share half the additional gains with investors as a Bitcoin Dividend once the original $500 million has been monetized. These dividends will be dispersed annually using Blockstream’s asset management platform.<\/p>\n

The act of submitting the bill, which was hinted at earlier this year<\/a>, kickstarts the first major milestone before the bonds can see the light of day. The next is getting it approved, which is expected to happen before Christmas, a source close to President Nayib Bukele told Bitcoin Magazine. The bill was submitted on November 17 and presented to the country\u2019s Congress today. It is embedded in full below.<\/p>\n