According to an announcement made by El Salvador’s National Bitcoin Office, the South American country passed a bill on Wednesday that will finally enable President Bukele to move forward with issuing Bitcoin-backed “Volcano Bonds”. Additionally, the new Digital Asset Securities law aims to provide a definitive regulatory framework for cryptocurrencies within the country.

El Salvador Opens the Way for “Volcano Bonds”

President Nayib Bukele has been planning to launch his Bitcoin-backed “Volcano Bonds” for over a year but has been forced to delay their issuance due to “economic instability stemming from the war between Russia and Ukraine”. Late in 2022, it was reported that the nation’s parliament received a digital securities bill that would enable the launch of the bonds.

“Volcano Bonds” represent El Salvador’s plans to issue Bitcoin-backed bonds that would fund the $1 billion “Bitcoin City” project. They are named after the country’s 160 volcanos that would provide the thermal energy for sustainable mining of Bitcoin. In early 2022, initial attempts to find backers for the bonds were met with lukewarm reception with many potential creditors reportedly fearing the country would default on its debt.

According to an announcement made by El Salvador’s National Bitcoin Office, the bill passed the vote in the parliament this Wednesday. In addition to paving the way for “Volcano Bonds”, the bill aims to establish a definitive legal framework for “all digital assets that are not Bitcoin”. Furthermore, the office stated that the new law will provide “unprecedented consumer protection from bad actors in the ‘crypto’ space” and “firmly establish that we are open for business to all those who wish to build the future with us on bitcoin”.

El Salvador Confident in Bitcoin Despite the “Crypto Winter”

In 2021, El Salvador became the first country in the world to recognize Bitcoin as legal tender. The move brought the South American country into the spotlight with both crypto enthusiasts, and crypto skeptics keeping a close eye. While the law was passed at the time the broader digital asset industry was rising high, the grimmer reality of 2022 brought much adversity to the country over its Bitcoin-related efforts.

Already in February 2022, the International Monetary Fund issued warnings to the country urging it to remove Bitcoin’s status as a legal tender. According to the IMF’s statement “the adoption of a cryptocurrency as legal tender, however, entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities.”

El Salvador chose not to heed IMF’s warnings and in many ways doubled down on its Bitcoin Policy. In June 2022, the country’s finance minister Alejandro Zelaya called the estimated losses due to the BTC’s declining price overstated. Furthermore, El Salvador adopted dollar-cost-averaging as its policy for acquiring more Bitcoin in mid-November. Currently, there is no official information on exactly how many BTC the South American country owns.

This article originally appeared on The Tokenist

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