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Thursday, June 1, 2023

El Salvador Approves Digital Assets Issuance Law

El Salvador Approves Digital Assets Issuance Law – El Salvador has taken another step toward integrating blockchain technology into the government’s financial processes. The Legislative Assembly has finally enacted the Digital Assets Issuance Law, which specifies the state’s framework for cryptocurrency-related public offerings. The measure, which was enacted with a majority due to the backing of Nayib Bukele’s party, aims to “to establish the legal framework that grants legal certainty to transfer operations to any title of digital assets that are used in the issuance of public offerings carried out in El Salvador.”

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The document also establishes the Bitcoin Funds Managing Agency, an independent institution that will handle the funds obtained by the state through the issuing of cryptocurrency-based bonds and will have direct contact with the El Salvador Treasury. This law, which was introduced in November, now serves as the basis for the issue of the long-awaited volcanic bonds, a collection of debt instruments that will be used in part to finance the development of Bitcoin City.

The city, which would be tax-free and carbon-neutral, would be powered by geothermal energy and constructed using $1 billion from these bonds. According to statements made by Alejandro Zelaya, the country’s Treasury Minister, the issuance of the volcanic bonds was continuously postponed by the government due to the conditions of the cryptocurrency market and the escalation of the Ukraine-Russia conflict.

However, not all deputies supported this law, as some expressed their dissatisfaction with the way in which it passed. Johnny Wright, part of the opposition coalition, stated: “El Salvador is creating ideal conditions for money laundering, an ecosystem that facilitates money laundering and tax evasion.” Furthermore, deputy Claudia Ortiz criticizes that this law opens the door for Bukele’s government to issue bonds without any control. Even so, there is still no date set for the issuance of the volcano bonds.


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