Salvadoran lawmakers pass digital asset issuance law in bitcoin haven

[Hydrogen]

In another exciting announcement from “Bitcoin Country”, El Salvador has announced the passing of its “Digital Asset Issuance” legislation that was proposed last November. This new digital asset regulatory framework paves the way for its much anticipated Volcano Token issuance.

A Regulatory Framework For Digital Assets

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

This new law establishes a legal framework around the issuance of digital assets and the broader crypto token classification, which includes every other type of digital asset in the crypto market besides Bitcoin. This means that there is now a definitive regulatory framework for tokenised securities, altcoins, and businesses that wish to transact or offer services focused on digital assets other than Bitcoin.

The new digital asset regulatory framework would also establish a Bitcoin Fund Management Agency, which provides oversight and administration for public offerings of digital assets issued by the state of El Salvador and its institutions.

Paving The Way For The Volcano Token

The 33-page digital securities bill was originally proposed in November of 2022 and is expected to lay the legal groundwork to allow the nation to move forward with its so-called “Volcano Bond”. The Volcano Bond, which is more accurately described as Volcano Token, is a digital token which would help El Salvador to raise capital to pay down its sovereign debt, direct funds towards the creation of Bitcoin mining infrastructure, and fund the construction of “Bitcoin City”.

El Salvador’s Volcano Token is targeted to raise $1 Billion and would be backed by the proceeds generated from its geothermal Bitcoin mining operation, which harnesses energy from the nation’s active volcanoes. By leveraging the nation’s natural resources and geothermal energy, El Salvador’s Bitcoin mining industry would utilise only renewable energy to create new Bitcoin, making investment in the bond very attractive to both traditional and ESG investors.

Bitcoin City is a planned special economic zone which was announced by Salvadoran President Nayib Bukele in November of 2021, which will be built on the Gulf of Fonseca on the southern coast of El Salvador, near El Salvador’s Conchagua volcano. Bitcoin City would offer tax advantages, friendly regulations, create mining infrastructure, and incentivise Bitcoin businesses and entrepreneurs to open offices and startups within the nation.

A New Financial Centre For Hyperbitcoinisation

With the passage of the digital asset issuance legislation, El Salvador is actively positioning itself to realise its vision to become a leading financial centre for the global Bitcoin economy, similar to the current roles played by nations like Switzerland, Luxembourg, Singapore, London and New York for legacy finance.

The digital asset issuance law comes on the heels of the formation of El Salvador’s newly created National Bitcoin Office (ONBTC), which was formed in November of 2022 to oversee the nation’s domestic Bitcoin projects. The ONBTC is an official government office which will oversee and carry out the country’s planned Bitcoin projects and collaborate with other nations internationally to develop and advise on Bitcoin policy.

Despite the bear market and Bitcoin’s price decline from $69,000 to its current price at the time of writing of $17,383, President Bukele has shown unwavering commitment to El Salvador’s Bitcoin strategy by announcing that El Salvador would be purchasing 1 Bitcoin per day, for an undetermined amount of time.

Detractors have pointed out that El Salvador is currently underwater on its purchase of more than 2,300 Bitcoin held on the nation’s balance sheet, but El Salvador hasn’t sold any Bitcoin yet, so they haven’t lost anything except for on paper. In a year’s time, as the next halving approaches in 2024, President Bukele may emerge as a very shrewd statesman as the Bitcoin price may begin to recover.

With Bitcoin’s long-term performance as an investment asset, his detractors may have to do an about-face if his strategy is successful. Bitfinex will be a technology provider for the nation’s Volcano Token, which is expected to move forward now that the new regulatory framework is in place. We are watching this development with excitement, along with the rest of the Bitcoin community.



https://blog.bitfinex.com/announcements/el-salvadors-historic-digital-asset-securities-law-passes/

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El salvador's crypto plans are still sounding ambitious in scope:

The 33-page digital securities bill was originally proposed in November of 2022 and is expected to lay the legal groundwork to allow the nation to move forward with its so-called “Volcano Bond”. The Volcano Bond, which is more accurately described as Volcano Token, is a digital token which would help El Salvador to raise capital to pay down its sovereign debt, direct funds towards the creation of Bitcoin mining infrastructure, and fund the construction of “Bitcoin City”.

El Salvador’s Volcano Token is targeted to raise $1 Billion and would be backed by the proceeds generated from its geothermal Bitcoin mining operation, which harnesses energy from the nation’s active volcanoes. By leveraging the nation’s natural resources and geothermal energy, El Salvador’s Bitcoin mining industry would utilise only renewable energy to create new Bitcoin, making investment in the bond very attractive to both traditional and ESG investors.

Bitcoin City is a planned special economic zone which was announced by Salvadoran President Nayib Bukele in November of 2021, which will be built on the Gulf of Fonseca on the southern coast of El Salvador, near El Salvador’s Conchagua volcano. Bitcoin City would offer tax advantages, friendly regulations, create mining infrastructure, and incentivise Bitcoin businesses and entrepreneurs to open offices and startups within the nation.

If I remember correctly, geothermal energy derived from volcanic steam vents are claimed to produce energy at lower cost in comparison to nuclear, wind power, hydroelectric, solar, fossil fuels and other methods of producing electricity. On paper this looks good for el salvador. However, the expertise and start up capital to finance such a project is what has been lacking. If el salvador could post regular updates which indicated progress was being made, it would generate a massive influx of credibility to support their proposals.

With an economic crisis looming, they're still proposing to build "bitcoin city". I applaud their ambition and courage. But have to wonder whether theirs is the pragmatic approach with potential storms lurking on the horizon.

[1714251619]

1714251619

[jackg]

For people to trust a toekn like that i think they'd also have to pay some sort od dividend too. Either by making people stake (less preferable because it'll cause volatility) or by wrapping.assets in the tokens to either be claimed or not (or just crediting addresses that have held the token for a certain amount of time). I think if they don't have this we'll see another flop.

Hopefully bitfinex also knows how to handle the logistics of using multiple chains too as I think most would expect erc20 and trc20 versions at least (fee and use wise).

There's never really much of a mention into the teams working on these projects and it might boost people's confidence if they did know that and stop these plans from failing (like the last one did). I think there's a big market a government could demand over similar things to what el Salvador has done, I don't know whether they're just doing it too early though or people are just not interested unless the offer is attractive enough.

[malcovi2]

For people to trust a toekn like that i think they'd also have to pay some sort od dividend too. Either by making people stake (less preferable because it'll cause volatility) or by wrapping.assets in the tokens to either be claimed or not (or just crediting addresses that have held the token for a certain amount of time). I think if they don't have this we'll see another flop.

Hopefully bitfinex also knows how to handle the logistics of using multiple chains too as I think most would expect erc20 and trc20 versions at least (fee and use wise).

There's never really much of a mention into the teams working on these projects and it might boost people's confidence if they did know that and stop these plans from failing (like the last one did). I think there's a big market a government could demand over similar things to what el Salvador has done, I don't know whether they're just doing it too early though or people are just not interested unless the offer is attractive enough.

It's not the people probably the president of Salvador is behind all of this.
He was pretty vocal about cryptocurrency on their country but I guess it would be an advantage for us who isn't a citizen in Salvador because they would be beta testing for us.

[BRINIRHA]

Not many choices for a small country like El Salvador. even El salvador doesn't have their own currency. So that steps have been taken since 2021, namely since legalizing bitcoin as a means of payment. and so far the Bill on Digital Asset Regulation that has been passed is a step that is quite aggressive but also has quite a good impact. maybe many doubted what Nayib Bukele was doing. However, these policies have in fact brought about a rapid increase in revenue from the tourism sector in the country. El Salvador wasn't very well known before. but now the country has become the center of attention of bitcoin lovers and also a lot of attention by other countries.

The bitcoin city dream is one step closer. with the passage of the bill. And I'm pretty sure One day the economy in Elsalvador will get better.

[MarjorieZimmermanGinger]

If I remember correctly, geothermal energy derived from volcanic steam vents are claimed to produce energy at lower cost in comparison to nuclear, wind power, hydroelectric, solar, fossil fuels and other methods of producing electricity. On paper this looks good for el salvador. However, the expertise and start up capital to finance such a project is what has been lacking. If el salvador could post regular updates which indicated progress was being made, it would generate a massive influx of credibility to support their proposals.

El Salvador has a slightly smaller area, the potential for developing geothermal energy from various aspects of renewal can be done and is more affordable, they will not lack capital to finance such a project, last December El Salvador has utilized geothermal energy for bitcoin mining. This power plant has produced 102 megawatts, President Nayib Bukele also offers cheap electricity for bitcoin mining using renewable energy methods that originate from the geothermal volcano Tecapa.

With an economic crisis looming, they're still proposing to build "bitcoin city". I applaud their ambition and courage. But have to wonder whether theirs is the pragmatic approach with potential storms lurking on the horizon.

So far there has been no pragmatic approach taken by El Salvador, in fact with a solution like this giving people a choice in accepting bitcoin adoption, the acceleration of adoption by El Salvador seems to be in line with the target they set. President Nayib Bukele is shrewd at spotting bitcoin adoption opportunities and supported by the absence of a national currency standard, so as to drive bitcoin adoption to the level he wants more quickly.

If bitcoin has shown a good rally for the next few months, the financial potential they have will also have a steady impact on project work, time will answer the doubts of many people about El Salvador, both in the renewal powerhouse project and the adoption of bitcoin in the country.

[DrBeer]

Unfortunately, the topic of cryptocurrencies as the "savior of the economy" is often used by populists and, to put it mildly, not the smartest rulers. the problem is that neither cryptocurrency, nor cowrie shells, nor silver or gold coins, nor virtual money - nothing will save the "lame economy". First you need to find the real causes of the problems, eliminate them. And the currency is just a product of the economy and not vice versa. By themselves, money (in any form) does not solve any problems ...

[Aanuoluwatofunmi]

One thing I wouldn't support from El-Savador's decision is the inclusion of other cryptos as securities, they have started already on a good ground with bitcoin alone and i think going further to introducing other tokens will create a deviation towards bitcoin being the center of it all regarding it adoption, for the fact that El-Savador has chosen bitcoin and bitcoin alone made it one of its famous achievements to recqoned with, there's no way any additional cryptos wouldn't make a breach to what it has been seing before now, i think El-Savador need no token or anything than keep with encouraging the more use and adoption of bitcoin.

[Flexystar]

I think it's too early to say anything about this project but yes they are seriously making progress towards the nation which will have bitcoin adoption on greater scale as compared to the others. However, in the silent awkwardness we have also seen news where El Salvador's peeps were not happy about the bitcoin currency because they are left out of the basic need fulfilment by their government. Now no one would really understand what is going on at the doorsteps of Salvadorian but in bigger picture it does seem promising for the bitcoin and any business that want to invest into the bitcoin in the long run.

If they succeed with the plans they are plotting here, then they are going to attract wider businesses and could develop the nation very fast.

[jackg]

It's not the people probably the president of Salvador is behind all of this.
He was pretty vocal about cryptocurrency on their country but I guess it would be an advantage for us who isn't a citizen in Salvador because they would be beta testing for us.

There's a way to president could outsource a lot of jobs and employ many teams externally (and it has clearly been done with the token infrastructure) but hopefully it isn't done with the physical things needed so locals can benefit from it (such as building the datacentres and electric generators even if not now then hopefully at a later iteration).

If the president is doing everything on his own, it won't boost the economy of the country at all. You'll just get citizens selling off or spending any shared profits as quickly as possible without realising the chance they could be scarce.

[el kaka22]

Volcanic energy resources are not that viable not because of price but because of the startup cost and the rare situation they are found. Like in my entire nation there is just a single place that is believed to be active thousands of years ago, hence we can't really get anything out of it. This is why it's not that common and not many people work on making it optimized. I am not saying it's a bad idea or anything.

El Salvador however working towards a bit more digital world is definitely a good example. I believe that anything they do, any law, any regulations they d are seen as something that is very good and I applaud them for it and all other nations are looking closely to it as well.

[Fortify]

El salvador's crypto plans are still sounding ambitious in scope:

The 33-page digital securities bill was originally proposed in November of 2022 and is expected to lay the legal groundwork to allow the nation to move forward with its so-called “Volcano Bond”. The Volcano Bond, which is more accurately described as Volcano Token, is a digital token which would help El Salvador to raise capital to pay down its sovereign debt, direct funds towards the creation of Bitcoin mining infrastructure, and fund the construction of “Bitcoin City”.

El Salvador’s Volcano Token is targeted to raise $1 Billion and would be backed by the proceeds generated from its geothermal Bitcoin mining operation, which harnesses energy from the nation’s active volcanoes. By leveraging the nation’s natural resources and geothermal energy, El Salvador’s Bitcoin mining industry would utilise only renewable energy to create new Bitcoin, making investment in the bond very attractive to both traditional and ESG investors.

Bitcoin City is a planned special economic zone which was announced by Salvadoran President Nayib Bukele in November of 2021, which will be built on the Gulf of Fonseca on the southern coast of El Salvador, near El Salvador’s Conchagua volcano. Bitcoin City would offer tax advantages, friendly regulations, create mining infrastructure, and incentivise Bitcoin businesses and entrepreneurs to open offices and startups within the nation.

If I remember correctly, geothermal energy derived from volcanic steam vents are claimed to produce energy at lower cost in comparison to nuclear, wind power, hydroelectric, solar, fossil fuels and other methods of producing electricity. On paper this looks good for el salvador. However, the expertise and start up capital to finance such a project is what has been lacking. If el salvador could post regular updates which indicated progress was being made, it would generate a massive influx of credibility to support their proposals.

With an economic crisis looming, they're still proposing to build "bitcoin city". I applaud their ambition and courage. But have to wonder whether theirs is the pragmatic approach with potential storms lurking on the horizon.

In reality Bitcoin has been quite a wasteful experience for the people of El Salvador, as their President decided to make it an official currency and buy up large amounts as it was on it's way downwards. He then continued to "buy the dip" in various chunks even as it kept descending, if he had waited a while then they would have been in possession of a lot more - alas, nobody can predict which direction it was going. He could have accepted it as an official currency without spending money from government coffers and then giving it away to citizens (who paid for this extravaganza out of their own taxes). It was in essence a vote buying operation but it will backfire in the long run.