El Salvador Passes Law Allowing Bitcoin Bond Issuance

In a bold move that reaffirms its status as a global pioneer in Bitcoin adoption, El Salvador has officially passed legislation permitting the issuance of Bitcoin-backed bonds. The new law, which was approved by a majority vote in the Legislative Assembly, provides a comprehensive regulatory framework for the creation, issuance, and trading of Bitcoin-based financial instruments — including the long-anticipated “Volcano Bonds.”

A Major Milestone for Bitcoin Nation

This legislation is part of President Nayib Bukele’s broader vision to transform El Salvador into a hub for Bitcoin innovation, investment, and infrastructure. The law enables the government to issue digital assets — specifically Bitcoin-backed bonds — on the country’s new digital asset platform, built to attract international capital and stimulate economic development.

The bonds, dubbed “Volcano Bonds,” aim to raise $1 billion in capital to fund two major initiatives: the development of Bitcoin City — a futuristic tax-free city powered by geothermal energy from the country’s volcanoes — and the purchase of additional Bitcoin for El Salvador’s national reserves.

“This is more than just a financial instrument,” President Bukele said in a statement. “It’s a declaration of independence from the global fiat system, and a beacon for those who believe in freedom, innovation, and the power of decentralized money.”

Regulatory Clarity and Investor Protection

The new law also establishes a Digital Assets Commission to oversee the market, ensuring transparency, investor protection, and regulatory compliance. The commission will be responsible for licensing digital asset service providers and approving future bond issuances.

By creating a legal and financial infrastructure that supports Bitcoin and blockchain innovation, El Salvador is positioning itself as a safe haven for crypto entrepreneurs and investors.

Finance Minister Alejandro Zelaya emphasized the importance of this move: “The approval of this law means El Salvador can diversify its sources of financing and move away from traditional institutions that impose restrictive and outdated conditions.”

Global Implications

El Salvador became the first country in the world to adopt Bitcoin as legal tender in 2021. Since then, it has accumulated Bitcoin as part of its treasury strategy and launched various initiatives aimed at Bitcoin education and financial inclusion.

Now, with the passage of this law, the country could unlock a new era of Bitcoin-backed finance that other nations may soon look to emulate — especially those with limited access to traditional capital markets.

Industry leaders and Bitcoin advocates around the world have praised El Salvador’s continued commitment to Bitcoin. Samson Mow, one of the key architects of the Volcano Bond concept, tweeted, “This is a historic day. El Salvador continues to lead the way for nation-state Bitcoin adoption. The Volcano Bond is no longer just an idea — it’s a soon-to-be reality.”

What Comes Next

With the legal greenlight secured, the first Bitcoin bond issuance is expected to occur later this year. The government plans to tokenize the bonds on the Liquid Network, a Bitcoin sidechain, allowing for global participation and near-instant settlement.

If successful, El Salvador’s Bitcoin bond strategy could mark the beginning of a new model for sovereign financing — one that leverages Bitcoin’s unique properties to offer transparency, accessibility, and freedom from monetary debasement.

As the world watches closely, El Salvador’s experiment continues to unfold — not just as an economic project, but as a philosophical challenge to the fiat-based world order.