The government of El Salvador, led by President Nayib Bukele, has advanced its plans to issue Bitcoin bonds by preparing 20 bills designed to provide them with a legal framework.
The head of the Treasury Alejandra Zelaya told the Salvadoran media The world on January 4 that the invoices will cover the regulations on the issuance of securities as cryptocurrency to ensure the viability of Bitcoin bonds which were proposed in November 2021. He said:
"[This is] to provide a legal structure and legal certainty to all who buy the Bitcoin bond. "
However, he did not propose a deadline for presenting the legislation to lawmakers.
The billion dollars requested by the bond issue would be used to finance the Bitcoin City Initiative that President Bukele has promised will provide "digital and technology education, city-wide geothermal energy, and efficient and sustainable public transportation."
One of the characteristics of Bitcoin City is a Bitcoin (BTC) mining operation that harnesses geothermal energy generated by a volcano to power mining platforms, leading to the bonds being called "Volcano Bonds". Mining operation mined its first 0.00599179 Bitcoin on October 1, 2021.
Funds from the bond issue could also be used to cancel an $ 800 million Eurobond issue due in January 2023. Zelaya told El Mundo that the country would need to find funders to help meet its obligation to pay the Eurobonds. that could come. of Bitcoin bonds or "institutional offerings from various investment banks" rather than another Eurobond issue.
"We can simply make payments without creating another Eurobond in the traditional market, and we can find a bond that is denominated in dollars and receives payment in Bitcoin."
A Eurobond is a debt tool for countries to raise funds in a different denomination than their own currency.
Zelaya also indicated that there is significant interest in the Bitcoin bond from investors, as it offers exposure to BTC and a 10-year maturity at 6.5% interest.
Related: President Bukele Predicts Bitcoin Rally to $ 100K, Increased Legal Adoption, and More
However, the issuance of Bitcoin bonds would not prevent the Central American nation from participating in traditional finance. Zelaya said "We are not going to abandon the traditional market."
Notable partners with El Salvador in the creation of Volcano Bonds include blockchain developer Blockstream and iFinex, which is closely related to the stablecoin Tether (USDT). The bonds are expected to be issued on Blockstream's Liquid Network and processed by iFinex.
President Bukele tweeted his predictions for 2022 on January 2 that "Bitcoin City will begin construction" and "volcanic bonds will be oversubscribed."
2022 predictions on #Bitcoin:
โข Will reach $ 100k
โข 2 more countries will adopt it as legal tender
โข It will become a major electoral issue in this year's US elections.
โข Bitcoin City will begin construction
โข Volcano bonds will be oversubscribed.
โข Big surprise in @TheBitcoinConf- Nayib Bukele (@nayibbukele) January 2, 2022
