El Salvador’s Historic Digital Asset Securities Law Passes!

El Salvador’s Historic Digital Asset Securities Law Passes!

In another interesting announcement from “Bitcoin Country,” El Salvador announced the adoption of a proposed “Digital Asset Issuance” law last November. This new digital asset regulatory framework paves the way for the long-awaited Volcano Token launch.

Regulatory framework for digital assets

In more historic news from El Salvador, the small Central American country that surprised the world by becoming the first country to accept Bitcoin as legal tender in September 2021, another breakthrough announcement comes with the passage of a “Digital Asset Issuance” securities law.

This new law creates a legal framework around the issuance of digital assets and a broader cryptocurrency token classification that covers any other type of digital asset in the cryptocurrency market besides Bitcoin. This means that there is now a definitive regulatory framework for tokenized securities, altcoins and businesses that want to conduct transactions or offer services focused on digital assets other than bitcoin.

The new digital asset regulatory framework will also create the Bitcoin Fund Management Agency, which will oversee and manage public offerings of digital assets issued by the state of El Salvador and its entities.

Paving the way for Vulcan Token

The 33-page digital securities bill was originally proposed in November 2022 and is expected to lay the legal groundwork for the country to move forward with the so-called “Volcano Bond.” The Vulcan Bond, more accurately described as the Vulcan Token, is a digital token that will help El Salvador raise capital to pay off its sovereign debt, fund the creation of Bitcoin mining infrastructure, and finance the construction of Bitcoin City. “.

El Salvador’s Volcano Token aims to raise $1 billion and will be backed by revenue from a geothermal Bitcoin mining operation that uses energy from the country’s active volcanoes. Taking advantage of the country’s natural resources and geothermal energy, El Salvador’s Bitcoin mining industry will use only renewable energy to generate new Bitcoin, making bond investing very attractive to both traditional and ESG investors.

Bitcoin City is a planned special economic zone announced by Salvadoran President Nayib Bukele in November 2021 to be built in the Gulf of Fonseca, near El Salvador’s Conchagua Volcano, on the south coast of El Salvador. Bitcoin City will offer tax benefits, friendly regulations, create mining infrastructure and encourage Bitcoin businesses and entrepreneurs to open offices and startups across the country.

A New Financial Center for Hyperbitcoinization

With the adoption of digital asset issuance legislation, El Salvador is actively positioning itself to realize its vision of becoming a leading financial center for the global Bitcoin economy, similar to the current roles played by nations such as Switzerland, Luxembourg, Singapore, London and New York. York for old finance.

The digital asset issuance law follows the formation of El Salvador’s newly created National Bitcoin Office (ONBTC), which was created in November 2022 to oversee the country’s local Bitcoin projects. ONBTC is the official government agency that will oversee and implement the country’s planned Bitcoin projects and collaborate with other countries internationally to develop and advise on Bitcoin policy.

Despite the bear market and the price of bitcoin dropping from $69,000 to $17,383, President Bukele has shown unwavering commitment to El Salvador’s Bitcoin strategy by announcing that El Salvador will receive 1 bitcoin per day. time.

Critics have pointed out that El Salvador is currently underwater with the purchase of more than 2,300 bitcoins in the country’s balance sheet, but El Salvador has yet to sell any Bitcoins, so on paper they have lost nothing else. A year from now, as the next halving approaches in 2024, President Bukele may emerge as a very shrewd statesman as the price of Bitcoin may begin to recover.

With Bitcoin’s long-term performance as an investment asset, its enemies may have to face off if its strategy is successful. Bitfinex will be the technology provider for the country’s Volcano Token, which is expected to move forward once the new regulatory framework is in place. We, along with the rest of the Bitcoin community, are watching this development with excitement.

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