The introduction of a bill about digital securities to El Salvador’s Congress has made it possible to issue bonds backed by bitcoin.
The Economy Minister of El Salvador, Maria Luisa Hayem Brevé proposed a bill to the nation’s legislative assembly for the issuing of digital assets, preparing the ground for the release of its bitcoin-backed “volcano” bonds
The innovative project, which was first introduced on 22 Nov 2021, has its championing initiative aimed to draw capital and shareholders to El Salvador. Strategies to grant $1 billion in stocks here on Liquid Network, a federalized Bitcoin sidechain, were made public at the time. Proceeds from the bonds would be divided between $500 million in project finance to bitcoin and funding of the exact amount in the development of the area’s energy and bitcoin mining facilities.
A sidechain is a separate blockchain that operates in tandem with another blockchain and enables the secure usage of tokens from the main blockchain while adhering to a dissimilar set of guidelines, performance standards, and security measures. As a sidechain of Bitcoin, Liquid enables two-way pegged bitcoin transactions that take place between Bitcoin networks and Liquid. L-BTC is the name of a bitcoin expression used on the Liquid network. The network’s participants, referred to as functionaries, administer and secure its verifiably comparable BTC value.
CTO of cryptocurrency exchange Bitfinex, Paolo Ardoino said on Twitter
“Digital securities law will enable El Salvador to be the financial centre of central and south America 🇸🇻”
For the purpose of processing and listing the El Salvadorian bond offering, Bitfinex is expected to receive a licence.
Investors will be able to obtain citizenship quickly through the bonds, which will yield 6.5%. Once the first $500 million is monetized, the administration will distribute half of the extra gains to shareholders as a Bitcoin Dividend. The asset management platform of Blockstream will be used to distribute these dividends on an annual basis.
The first significant step before the bonds may be issued is the submission of the proposal, which was alluded to earlier this year. After that comes approval, which is anticipated to occur before Christmas, according to a top aide to President Nayib Bukele, who is quoted in Bitcoin Magazine. The proposal was made on 17th Nov and was made today to the nation’s Congress.
Ken Emmanuel is a Blockchain Content writer, a Web3 Enthusiast and a Social Media Management Strategist, he likes writing educative contents to help people gain more knowledge and get inspired. The growth of any organization he work with is always his priority. He is a Geographer by profession and loves reading.