The Legislative Assembly Of El Salvador Passes Digital Securities LegislationThis provides the legal framework for the country to issue cryptocurrency-based debt securities. The approved law was passed with a majority vote. President Nayib Bukele presented it in Congress, paving the way for the issuance of the long-awaited volcano bond.
El Salvador Adopts Law for Digital Securities
El Salvador has taken another step forward in the incorporation of blockchain technology into the state’s financial operations. The Legislative Assembly finally passed the Digital Assets Issuance Law, which sets out the rules for public offerings of digital assets.
The law was passed with a majority of votes, thanks to the support of Nayib Bukele’s party. It seeks to “establish the legal framework that provides legal certainty to the transfer operations of any title of digital assets used in public offerings carried out in El Salvador”.
The document also established the Bitcoin Fund Management Agency. This independent agency will be responsible for managing the funds the state receives from the issuance of cryptocurrency-based bonds, and will be in direct contact with the El Salvador Treasury.
Implications and Further Progress
The law was approved by the Senate and presented to the House in November. Its approval makes possible the issuance of the long-awaited volcano bonds, a set of debt instruments that can be used to partially finance the construction and operation of the country’s capital, Bitcoin City. This city would be carbon-neutral and tax-free, and would be powered by geothermal energy and built with $1 billion of these bonds.
According to projections, the El Salvador volcano bonds could be issued last year. However, the government delayed their issuance several times due to the cryptocurrency market conditions and the escalating cost of cryptocurrencies, according to statements from Alejandro Zelaya, Minister of Finance of the country.
Not all deputies supported the law. Some expressed dissatisfaction with its approval. Johnny Wright, of the opposition coalition, said:
El Salvador is creating ideal conditions for money laundering.
Claudia Ortiz, another deputy, also objected to the law, arguing that it allows the Bukele government to issue bonds without any form of control. Nevertheless, the date for issuance of the volcano bonds has not yet been set.
What do you think about the approval of the Digital Assets Issuance Law in El Salvador? Please leave a comment below.
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