Last week, El Salvador came one step closer to issuing its controversial Bitcoin-backed “volcano bonds.” The country’s legislative assembly has passed a legal framework for issuing blockchain-based digital securities, including provisions that allow companies to handle digital assets other than Bitcoin.
On January 11th, 62 members voted in favor of this new digital asset issuance law. However, El Salvadoran President Naive Bukele originally planned to issue the bonds as early as March 2022.
The Bukele government has postponed the issuance of government bonds several times, partly due to the slump in the digital asset market last year, but there were also more pressing issues, such as a nationwide crackdown on gangs. Adult male living in Japan.
The president has struggled to prove that the move means anything to the country since it launched Bitcoin legal tender in 2021 — El Salvador Sparring with major international players In the financial industry like the International Monetary Fund.
In fact, the country holds 2,300 bitcoins, well below the average purchase price. In November, Bukele Lost $65 million buying Bitcoin — 61% loss. That same month, he announced plans to buy one bitcoin a day for an indeterminate period of time.
With the passage of the country’s new Digital Asset Issuance Law, El Salvador is one step closer to finally being ready to sell its Volcano Bonds for Bitcoin and US dollars, especially Tether.
Here’s what you should know:
Volcanic ties are coming whether Salvadorans want it or not
Bukele has a way of getting what you want. He unilaterally changed the constitution to allow him to stay in office longer than the previous legal period. Bukele deployed an army to force the legislators to pass his laws.
savior There was no firm legal framework for issuing debt in digital assets until the legislature introduces the bill in November. It passed earlier this week.
The bill would add the National Digital Assets Commission to Bukele’s previously established National Bitcoin Office to govern the regulation of private participants in the digital assets industry. It will also establish a Bitcoin Fund Management Authority to manage funds raised through the public offering of digital assets in El Salvador.
Bukele plans to raise up to $1 billion in Volcano Bond. His administration has said it will use the proceeds to pay off government debt, invest in bitcoin mining infrastructure, buy bitcoin and build a “bitcoin city.”
read more: El Salvador may be broBut there’s still $200 million in Bitcoin Beach
Bitcoin City: Waypoints along China’s Belt and Road
If realized, Bitcoin City would exist in the Fonseca Bay on the southern coast of El Salvador. The whole project is a recycled version of his ZEDES project in China. The city features a friendly regulatory and tax regime for digital asset businesses interested in doing business in El Salvador.
bitcoin city rendering careless plagiarism without a sourceThey were redrawn on the map of Central City from the manga series Fullmetal Alchemist.
The Bukele government plans to use the nearby Conchagua volcano to mine Bitcoin with geothermal energy. Proceeds from mining the volcano back the new bond, hence the name “volcano bond”.
That said, geothermal experts have expressed doubts about the economic viability of geothermal power generation at the Conchagua volcano. As of December 2019, El Salvador was still importing one-fifth of his electricity despite years of volcanic presence with every opportunity for power infrastructure development.
In addition, industrial power in El Salvador is Still prohibitively expensive for Bitcoin mining, averaging 13–15 cents per kWh. For years, China and Kazakhstan have sold industrial power contracts for bitcoin mining at less than 5 cents per kWh.
Bitfinex ensures that Tether is accepted as a funding source
Bitfinex’s statement on the Digital Asset Issuance Act expected the use of renewable geothermal energy to attract investors interested in environmental, social and governance (ESG) investments. Environmentalists have frequently criticized Bitcoin’s energy use, despite reports that more than half of the energy used to mine Bitcoin comes from sustainable sources.
read more: Opinion: Bitfinex will be a total fascist
Controversial digital asset exchange Bitfinex provides infrastructure services for Volcano Bond.We call the bonds “volcano tokens” and Exists as a digital token on the blockchainVolcano Bonds accepts funding units in Bitcoin, USD and importantly Tether.
El Salvador’s volcano bonds seem like a great way to cheat Tether by exchanging it for government-approved bond issuances.
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