Introduction

The start of the regulatory process began in November 2022 when the Digital Asset Issuance law was passed. This law allowed for the expansion of the country’s cryptocurrency market to include securities and altcoins, marking a significant step forward.

The establishment of the Bitcoin Fund Management Agency was a key part of the regulatory journey, tasked with overseeing public offerings of digital assets issued by the country and its institutions.

Another important aspect of El Salvador's progress in the crypto world is the digital securities bill, a 33-page document that laid the groundwork for Bitcoin Volcano Bonds. These bonds received regulatory approval from the country's Digital Assets Commission in late 2023.

The main goal of this law is to create a legal framework that ensures smooth transactions for any digital assets used in public offerings.

While this new legal framework does not cover non-fungible tokens (NFTs) as they are already regulated under different laws in the country.

El Salvador's Bitcoin City project involves a mining facility powered by renewable energy, including energy from the country's active volcanoes. The Volcano Bonds are designed to address sovereign debt and fund the construction of the Bitcoin City.

The first phase of construction involves building a 241-megawatt mining facility that will produce 169 MW of solar energy and 71 MW of wind power. The facility is located close to the Conchagua volcano, which provides the power needed for Bitcoin mining operations.

The aim of the Bitcoin City project is to support businesses and start-ups with tax benefits, crypto-friendly regulations, and other incentives to create a sustainable Bitcoin mining hub.