• Tue. May 28th, 2024

Newly Passed Law In El Salvador To Allow Bitcoin-Backed Bonds


ByMaria Fairchild

Jan 13, 2023

After El Salvador made Bitcoin a legal payment means, the country faced a challenging year. 

However, the Legislative body voted in favour of a significant piece of legislation known as Digital Asset Issuance. This also makes way for the use of Bitcoin-Backed funds in the country.

New Development In The Country

The newly passed legislation in El Salvador lays the foundation for implementing regulations for digital assets, including cryptocurrencies.

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This includes President Nayib Bukele’s proposed issuance of $1 billion in Bitcoin-Backed bonds on the Liquid Network. However, the bond issuance had been delayed due to market conditions and the decrease in Bitcoin’s value during the crypto winter in 2022.

The funds raised will be divided, with half invested in Bitcoin and the other half going towards the development of infrastructure in the BTC industry. 

This legislation now places cryptocurrencies and digital assets under regulations by regulatory bodies in the country. This is important to protect and safeguard investors’ funds and interests in the country.

Bitcoin As A Legal Means Of Payment In El Salvador

The adoption of Bitcoin as a legal tender in El Salvador is a historic development that could have good effects on the country’s economy, as well as on the global financial system. 

It remains to be seen how the market will react to the issuance of Bitcoin-backed bonds. It is however clear that this is an important step forward for the country and for the use of digital assets in general.

The move to issue Bitcoin-backed bonds is a significant development, as it represents a new way for governments to raise capital. 

Traditional bonds are issued in the country’s currency and are backed by the government’s ability to repay the debt. Bitcoin-backed bonds, on the other hand, are backed by the value of the digital asset itself. 

This means that the value of the bond will be directly tied to the price of Bitcoin, and could offer investors a new way to gain exposure to the cryptocurrency market.

Critics have however maintained a pessimistic stance on this development, stating that the volatility of the crypto space will significantly affect the country’s economy. However, the President of El Salvador seems undeterred by these critics and looks forward to diving more into the blockchain and crypto space.

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