El Salvador's Congress Passes Digital Securities Law, Plans to Raise $500 Million in Bitcoin Bonds

El Salvador’s Congress has reportedly announced the adoption of a digital securities law that will allow the country to raise funds through the world’s first sovereign blockchain bond. Congress passed the bill in a 62-16 vote before it will be sent to President Nayib Bukele for his signature. The bill creates a legal framework that will support Bukele's sale of bitcoin bonds aimed at raising $500 million to build a tax-free coastal town called Bitcoin City, which will harness geothermal energy from a nearby volcano Mining digital currency. Under the government’s proposal, another $500 million would be earmarked for bitcoin, with any appreciation in the digital currency ultimately shared with bondholders. As originally proposed by the government, the tokenized bonds would be denominated in U.S. dollars and carry an annual interest rate of 6.5 percent for 10 years. The plan has been criticized by credit rating agencies and the International Monetary Fund. Previously, the government of El Salvador promised to sell bitcoin bonds in the first quarter of 2021, but the issuance was delayed several times due to the decline in bitcoin prices. According to Bukele’s tweet, the government of El Salvador has purchased 2,381 bitcoins by June 2021. On November 16 of the same year, he stated that the government would buy one bitcoin per day.