Luke Huigsloot
El Salvador has passed landmark legislation providing the legal framework for a Bitcoin-backed bond — known as the “Volcano Bond” — that will be used to pay down sovereign debt and fund the construction of its proposed “Bitcoin City”.
The bill passed on Jan. 11 with 62 votes for and 16 against, and is set to become law after it is ratified by President Bukele.
The National Bitcoin Office of El Salvador announced the passage of the bill in a Jan. 11 Twitter thread, noting that it would begin issuing the bonds soon.
According to crypto exchange Bitfinex, which is the technology provider for the bonds, the Volcano Bond — or Volcano Tokens — would allow El Salvador to raise capital to pay down its sovereign debt, fund construction of the Bitcoin City and create Bitcoin mining infrastructure.
The volcano descriptor for the bonds is derived from the location of the country’s Bitcoin City, which is set to become a renewable crypto-minin hub powered by hydrothermal energy from the nearby Conchagua volcano.
Bitfinex notes that the city would be a special economic zone similar to those seen in China, which would offer tax advantages, crypto-friendly regulations and otherwise incentivize Bitcoin businesses for its residents.
The bonds have been targeted to raise $1 billion for the country, with half of it going into building the special economic zone.
According to the initial proposal, the tokenized bonds would be denominated in U.S. dollars, have a ten-year maturity date and carry an annual interest rate of 6.5%.
Samson Mow, a Bitcoin proponent who has been involved in the development of the Volcano Token, told Cointelegraph that the bill’s passage could help turn the country into a “major” financial hub.
“The move to pass the new Digital Securities Law, and enable new instruments like the Bitcoin Bonds, will help El Salvador to pay off their existing debts and will be critical to transforming the country into a major financial center of the world.”
The bill also includes a legal framework for all digital assets that are not Bitcoin, in addition to those issued on Bitcoin, and creates a new regulatory agency that will be in charge of applying the securities law and providing protection from bad actors.
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Brayden Lindrea
The names of up to nine million FTX customers are set to remain confidential for at least three more months following the latest ruling in FTX bankruptcy proceedings.
The decision was reportedly made by Judge John Dorsey in the Delaware-based bankruptcy court on Jan. 11 in response to a 168-page filing by FTX on Jan. 8, which requested the court to withhold confidential customer information.
Judge Dorsey said that he remains “reluctant at this point” to disclose the confidential information, as it may put creditors “at risk,” despite increased pressure from several media outlets:
“We’re talking about individuals here who are not present – individuals who may be at risk if their name and information is disclosed.”
Days earlier, FTX lawyers argued “that disclosure of the information would create an undue risk of identity theft or unlawful injury to the individual or the individual’s property” and that the court should use its “broad discretion” under the U.S. Bankruptcy Code to protect those affected by FTX’s collapse.
In late December, a group of non-U.S. FTX customers also pushed the Delaware bankruptcy court to keep customer information private, arguing in a Dec. 28 joinder filing that public disclosure would cause “irreparable harm.”
Judge Dorsey’s decision does however run contrary to most bankruptcy proceedings where creditor information is disclosed — which is what happened in cryptocurrency lender Celsius’ bankruptcy proceedings in October.
The Delaware-based bankruptcy court hasn’t been as kind to FTX equity holders, having released a Jan. 9 document that disclosed the investors expected to be wiped out and the number of shares they held with FTX.
Among those included NFL legend and former FTX brand ambassador Tom Brady, his ex-wife Gisele Bündchen, tech entrepreneur Peter Thiel and Shark Tank investor Kevin O’Leary.
It appears that progress is being made though, with FTX reported to have already recovered $5 billion in cash and cryptocurrency, FTX attorney Andy Dietderich said in a Jan. 11 statement.
According to early bankruptcy filings in November, more than 1 million creditors were speculated to be involved, with $3 billion being owed to the 50 largest creditors alone.
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Derek Andersen
The City of London has teamed up with a variety of trade associations to form the UK Forum for Digital Currencies, an alliance that will advocate for “better policies, practice and regulation around digital currencies,” according to a statement released by its five members.
As well as the City of London Corporation — the city’s municipal governing body — the forum consists of the Digital Pound Foundation, the Payments Association, CityUK and UK Finance. The latter three organizations are national financial and professional advocacy groups that have previously been engaged in crypto research and advocacy.
The forum members will collaborate on an industry-wide response to developments in the cryptosphere. The statement specifically mentions central bank digital currency and “the regulatory approach to stablecoins and other variable value cryptoassets” as its purview. The statement said:
“The group will seek to enable a safe and secure environment for innovators to grow and attract international investment into the UK. […] The group will aim to mitigate the actual risks and alleviate the perceived risks through education and the ability to advocate for appropriate policy and proportionate regulation.”
The group will seek to “align the associations’ education programs and policy advocacy with the UK’s regulatory framework” to increase mutual understanding between the United Kingdom’s financial services industry and the crypto industry. Part of the new forum’s mission will also be “the development of common terminology which embraces existing definitions used in the sector into a single lexicon.”
The Digital Pound Foundation, Payments Association and UK Finance formed the UK Industry Digital Currencies Coordination Group in June. That association had similar goals to the UK Forum for Digital Currencies.
UK Forum for Digital Currencies joined the likes of CryptoUK and the British Blockchain Association in crypto industry advocacy. According to its website, CryptoUK has close to 150 community, corporate and institutional members. The British Blockchain Association has an international focus with members that include universities, blockchain associations and other interested groups worldwide.
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This Daily Dose was brought to you by Cointelegraph.
