El Salvador has approved a law that will allow it to issue Bonds denominated in the Bitcoin (BTC) cryptocurrency.
This will likely lead to a lot more usage and reliance on the BTC cryptocurrency for the country. This could result in increased usage for the cryptocurrency, and interest, as it is a scarce cryptocurrency with a maximum supply of 21 million coins that can ever be mined.
But what does this mean for the future of El Salvador and the blockchain space as a whole? We will be going over everything investors, and traders need to know surrounding the current state of the bill.
El Salvador’s Approved Law Towards The Issuance of Volcano Bonds
On January 11, 2023, we got a glimpse into the future surrounding El Salvador. Specifically, The Legislative Assembly of El Salvador approved a bill, where 62 votes were for and 16 were against.
Even president Nayib Bukele went to Twitter to essentially share the news.
“El Salvador’s Legislative Assembly has just approved, by an overwhelming majority, the new Digital Securities Law!” said Nayib Bukele.
This digital securities law, passed by congress, will allow the nation to issue Bitcoin-backed bonds, which are also known as Volcano Bonds.
The National Bitcoin Office (ONBTC) within El Salvador, which is a specialized administrative unit that has the primary objective of coordinating and then consulting all and any Bitcoin-related projects throughout the country, announced the news through Twitter. However, they also noted that they would begin issuing the bonds soon.
"Today El Salvador builds on our first-mover advantage by passing landmark legislation establishing a legal framework for all digital assets that are not bitcoin. As well as those issued on bitcoin. The law also paves the way for volcano bonds which we will soon begin issuing.", was said in the official announcement.
The Future in El Salvador
To get a better perspective on the future, we first need to take a look at history. In November of 2021, Buekel announced the construction of what was dubbed the "Bitcoin City" in the eastern department of La Union, which would essentially get its power from geothermal energy from a volcano in the region.
The government has already bought 2,391 Bitcoin (BTC) for $107 million. Furthermore, on November 17, Bukele also announced that the government would buy one Bitcoin every single day; however, Bukele did not specify for how long this would occur.
With that in mind, El Salvador has become the epicenter of the adoption of Bitcoin.
With the passing of this new digital securities law, El Salvador will now offer a higher level of customer protection from bad actors within the crypto space and will also establish that they are open for business to anyone interested in building through Bitcoin.
This new legislation will also create the National Digital Assets Commission, which is a regulating agency that has the primary objective of applying the securities law and protecting the rights of digital asset purchasers, as well as issuers in El Salvador, alongside deterring fraudsters from conducting operations there.
Under the leadership of President Bukele, El Salvador also became one of the safest countries in Latin America and also had strong protection of a person's right to economic freedom, sovereignty, and prosperity. All of this has established El Salvador to be recognized within the blockchain space as a Bitcoin country.
How Bitcoin Can Move Forward
For many investors, the question on their mind is, what is the perfect time to actually invest in Bitcoin. Given the fact that this law can put Bitcoin bonds into effect, we can expect much more interest and utility for the BTC cryptocurrency.
Anyone that aims to get into cryptocurrency investing can leverage strategies, such as the Dollar Cost Averaging (DCA) trading strategy.
Additionally, Bitcoin is available on numerous cryptocurrency exchanges, such as Binance.US, Coinbase Pro and Gemini.
By leveraging tools such as ZenDCA, anyone can automate and schedule their purchases of the Bitcoin (BTC) cryptocurrency, which will enable them to implement the DCA strategy to its maximum potential.
There is no guarantee that Bitcoin can instantly climb in value, but this law does lead to the assumption that Bitcoin will likely see far more use cases and appeal from the perspective of new investors, especially ones that live and are residents of El Salvador.
The aforementioned bill creates a legal framework that will underpin Bukele’s plans to sell Bitcoin-backed bonds.
With that in mind, the securities are aiming to raise $500 million and help build a tax-free, coastal town known as Bitcoin City. An additional $500 million is intended for buying Bitcoin, where any appreciation in the value of the digital currency will be shared across the bondholders based on the initial proposal.
This plan has seen criticism by credit rating agencies, alongside the International Monetary Fund. However, the nation's bonds are trading at a discount as investors are placing risk of default.
In any case, El Salvador is still carrying on with the daily Bitcoin purchase, and they will likely carry on increasing their portfolio for the foreseeable future. However, no end date has been set for that specific task.