LatinNews Daily - 12 January 2023

In brief: El Salvador approves new legislative bill on digital securities

*Following El Salvador’s adoption of cryptocurrency bitcoin in September 2021 as legal tender, the 84-member unicameral legislature has approved a bill that would regulate the issuance of other digital assets by both the state and private entities as well as providing the legal framework that would underpin President Nayib Bukele’s plans to sell bitcoin-backed bonds. According to the legislation, which was tabled in November 2022, the law’s objective is to establish a juridical framework to provide legal certainty to transfer operations to any title of digital assets used in public issuance offers. Among other things, the legislation also establishes the creation of a national commission for digital assets and a bitcoin funds administration agency (AAB) tasked with administering, safeguarding, and investing funds from public offerings of digital assets carried out by the government. President Bukele retweeted a post by El Salvador’s national bitcoin office (ONBTC), which was created by the government last year, indicating that the law also “paves the way for volcano bonds which we will soon be issuing” – a reference to plans announced in 2021 by the government to issue ‘bitcoin bonds’ to finance the construction of the first ‘Bitcoin City’ in El Salvador, in La Unión department, to take advantage of energy from the Conchagua volcano. El Salvador’s adoption of bitcoin as legal tender has remained highly controversial and has been ill-received by international financial institutions like the International Monetary Fund (IMF) and credit ratings agencies.

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