(Bloomberg) -- El Salvador’s congress approved a digital securities law that would allow the nation to raise funds through the world’s first sovereign blockchain bond. 

Congress approved the bill by 62 votes to 16. It will be sent to President Nayib Bukele for signing. 

The bill creates a legal framework that would underpin Bukele’s plans to sell Bitcoin-backed bonds. The securities are intended to raise $500 million to help build a tax-free, coastal town known as Bitcoin City, that would have geothermal energy from a nearby volcano for mining digital coins. 

Another $500 million would be earmarked for buying Bitcoin, with any appreciation in the digital currency ultimately shared with bondholders, according to the government’s proposal. 

The plan has been criticized by credit ratings agencies and the International Monetary Fund, while the nation’s bonds are trading at a steep discount as investors price in a risk of default. 

Read more: El Salvador’s Controversial Bitcoin Bond

El Salvador became the world’s first nation to make Bitcoin legal tender in 2021 and Bukele announced plans for the so-called volcano bond during a presentation to Bitcoin enthusiasts at a beach town in El Salvador in November 2021. Under the government’s initial proposal, the tokenized bonds would be denominated in U.S. dollars and pay 6.5% annually for 10 years. 

The government initially promised to sell the bonds in the first quarter of 2021, but postponed the issuance several times because Bitcoin’s price decline hurt investor sentiment, according to Finance Minister Alejandro Zelaya. 

Bukele’s administration had purchased 2,381 Bitcoin through June 2021, according to his announcements on Twitter. On November 16, he said the government would buy one Bitcoin every day.  

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