El Salvador Legislators Pass Law Allowing Bitcoin Bond Sales

El Salvador’s Legislative Assembly passed a significant law that allowed for the issuance of Bitcoin-backed bonds, often referred to as "Volcano Bonds". This law was a landmark move in the country’s embrace of Bitcoin and represented a step forward in its financial innovation journey.
 

The law created a legal framework for the issuance of these bonds, which were part of a broader strategy to raise capital for the country. The funds raised from the Volcano Bonds were intended to be used for various purposes, including paying down sovereign debt, funding the construction of “Bitcoin City,” and creating infrastructure for Bitcoin mining.
 

The term “Volcano Bond” comes from the plan to use geothermal energy from El Salvador’s volcanoes to power Bitcoin mining operations, which would support the bonds. The initiative was part of President Nayib Bukele’s vision to harness the country’s natural resources for economic growth and to establish El Salvador as a hub for Bitcoin innovation.
 

The bond issuance was initially proposed to raise $1 billion, with half of that amount allocated to building the special economic zone known as Bitcoin City. This city is envisioned to be a center for Bitcoin development, offering tax advantages and other incentives to attract businesses and investors.