Recently, the Legislative Assembly of El Salvador passed a bill on Bitcoin-backed bonds. It will serve as a base for the issuance of Volcano Bond, which is a bitcoin-backed bond. It can also be used to pay down sovereign debt and provide funds to build the proposed "Bitcoin City." 

A Jan. 11 tweet from El Salvador's National Bitcoin Office announced that the bill had passed and the bonds would soon be issued. The bill was passed with 62 votes in favor and 16 votes against it, and it will become law after President ratifies it.  No date has been announced for the issue of the volcano bonds.

In addition to creating a regulatory body, the "Digital Asset Issuance" legislation will also establish a legal framework for all digital assets. El Salvador's Legislative Assembly enacted the Digital Assets Issuance Law, which establishes a framework for the country to issue crypto-related debt instruments. The authorized law serves as the foundation for long-awaited volcanic bonds. El Salvador has taken another step toward integrating blockchain technology into the state's financial processes.

The document also establishes the bitcoin funds managing agency, which is an autonomous 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 Salvadoran Treasury.

The Central American nation announced in November 2021 that it planned to raise $1 billion through bitcoin-backed bonds. The approval of this law came in November. The tax-free and carbon-neutral metropolis would be developed using $1 billion and would be powered by geothermal energy.

About Volcano bonds 

Volcano bonds which is a set of debt instruments that will be used to partially fund the development of the country's Bitcoin City. The term Volcano Bonds is drawn from El Salvador's Bitcoin City, which is planned to become a renewable crypto-mining hub powered by hydrothermal energy from the country's active volcanoes.