El Salvador’s Minister of the Economy Maria Luisa Hayem Brevé presented a digital assets issuance bill in the legislative assembly, to launch Bitcoin-backed bonds.

The plan was announced in November last year and its bill was submitted on 17 November. On 23 November, it was presented to Congress.

This initiative aims to issue $1 billion in bonds on the Liquid Network, a federated Bitcoin sidechain. The fund is supposed to be distributed in two equal parts, $500 million for direct Bitcoin allocation and another $500 million for creating crypto mining and energy infrastructure in the region.

The bonds will pay a 6.5% yield and allow investors to gain citizenship quickly. Once the original $500 million has been monetized, the government will distribute half of the additional gains to investors as a Bitcoin Dividend. These dividends will be distributed on an annual basis through Blockstream’s asset management platform.

The tax-free Bitcoin City would be built with the help of the proposed blockchain bonds through a $100 million investment, which would also provide geothermal energy from a nearby volcano for crypto mining. Cryptocurrency exchange Bitfinex is about to be permitted a license to be able to process and list bond issuance in the country.

In September 2021, El Salvador became tender.the first country to adopt Bitcoin as a legal tender. This step of the government is an instrument of creating a legal framework for transferring virtual assets in the country’s public issuances, in addition to regulating the requirements and obligations of issuers and providers of virtual assets.