Bitfinex CTO, Paolo Ardoino, has announced that El Salvador’s Bitcoin-powered bonds, known as volcano bonds, will launch between June and September this year. After months of delays since it was first announced by El Salvador’s president Nayib Bukele in November 2021, the country’s congress finally passed the “Digital Asset Issuance” legislation, which provides a legal framework for the issuance of bitcoin-backed bonds, including other digital assets, such as altcoins, tokenized securities, and stablecoins.
Ardoino spoke at the Paris Blockchain Week 2023 and hinted that the volcano bonds are set to launch soon. The bonds are intended to raise funds to build a bitcoin city in the Central American country, and according to El Salvador’s president Nayib Bukele, they are expected to raise over $1 billion in token sales to pay off the country’s debt, direct funds towards the creation of another bitcoin mining infrastructure, and fund the construction of “Bitcoin City”.
Bitcoin City is a well-structured economic zone that will be located in the Gulf of Fonseca on the southern coast of El Salvador, near the Conchagua volcano. The proposed bitcoin city will offer tax advantages, create mining infrastructure, and incentivize bitcoin businesses and entrepreneurs to open offices and startups in the country.
El Salvador’s affinity for bitcoin has also inspired other nation’s leaders to consider adopting the premier cryptocurrency as a legal tender. In September 2022, El Salvador passed a bill that made bitcoin a legal tender in the country. Despite the adoption of bitcoin as legal tender, the International Monetary Fund (IMF) raised concerns regarding the decision, stating that it raised several macroeconomic, financial, and legal issues in the country.
In February 2023, El Salvador announced plans to open its second Bitcoin Embassy in Texas, USA, after launching the first one in Lugano, Switzerland. The country’s government has continuously advocated for the adoption of cryptocurrencies in the country and even invested in BTC as an asset for the country.
The volcano bonds are powered by a geothermal mining facility in El Salvador and have experienced several challenges experienced in establishing a suitable legal framework to facilitate its launch. However, the new digital asset issuance law will not only apply to the issuance of bitcoin or bitcoin-related offerings but also to other digital assets. These bonds will create a new market for investors to invest in the El Salvadoran economy while also sparking a new wave of innovation in the digital asset ecosystem.
Overall, the launch of the volcano bonds in El Salvador demonstrates how blockchain technology can be utilized to raise capital, which can be used to finance innovative and transformative projects, such as Bitcoin City. This new experiment in blockchain technology will serve as a litmus test for adoption and innovation globally while also creating new economic opportunities in the region.
