- El Salvador plans to set up a Bitcoin city at the foot of a volcano.
- The $1 billion bond issue would support President Bukele’s Bitcoin City plan.
El Salvador is the first nation to approve Bitcoin as legal money. Fears of instability and inflation sparked large-scale demonstrations in the Latin American nation as a result of the decision. As declared by President Nayib Bukele, El Salvador plans to set up a Bitcoin city at the foot of a volcano. The city will be erected in the south-eastern part of La Union and will be round in appearance.
The $1 billion bond issue would support President Bukele’s Bitcoin City plan, which includes digital and technology education, geothermal energy for the whole city, with safe and sustainable public transportation.
Blockchain developer Blockstream and iFinex, which is closely linked to the stablecoin Tether, collaborated with El Salvador on the Volcano Bonds project. Blockstream’s Liquid Network is planned to issue the bonds, which will then be processed by iFinex.
Legal Framework for Bitcoin Bonds
President Nayib Bukele’s administration is drafting 20 pieces of legislation to establish a legal framework for Bitcoin bonds. According to Alejandra Zelaya, head of the Treasury, the legislation would be introduced to assure the sustainability of Bitcoin bonds planned in November 2021. No schedule was provided for presenting the measure to Lawmakers.
The bond proceeds might potentially be used to pay down an $800 million Eurobond maturing in January 2023. A Eurobond is a debt mechanism that allows governments to raise financing in a different currency. As a result of the Bitcoin bond’s 6.5% interest rate and 10-year maturity, investors are eager to get their hands on it.
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