El Salvador is getting closer to issuing its Bitcoin bonds. To begin the process, the country’s Finance Minister announced that the administration would send Congress roughly 20 bills which was later confirmed by President Nayib Bukele on Twitter.
El Salvador’s Finance Minister, Alejandro Zelaya, said that the measures would “give legal structure and legal certainty to everyone who buys the Bitcoin bond.”
This year, the aim is to sell $1 billion in bonds, with half of the revenues being converted to Bitcoin and the other half going toward Bitcoin infrastructure and mining. The administration hopes that the issuance will help to establish Bitcoin City, a tax-free enclave in the country’s east powered by geothermal energy from neighboring volcanoes.
“We are the first country to release a Bitcoin bond. And because we are the first country to do this, it needs to be regulated,” said Zelaya, adding that the government was drafting the appropriate legislation for the bonds to be released.
El Salvador became the first government in the world to recognize Bitcoin as legal tender last year. If businesses have the technological means (which many still do not), they must now adopt it. The Bitcoin community has so far applauded the action, but the World Bank, International Monetary Fund, and global credit rating agencies constantly criticise it. On multiple instances, citizens have staged protests against El Salvador’s Bitcoin Law.
The country’s Bitcoin-loving president is continually launching crypto-related ventures, including Bitcoin bonds, the most recent of which is Bitcoin City.
Blockstream, a Bitcoin infrastructure company that has been aiding the Lightning Network (a second-layer solution for making Bitcoin transactions faster and cheaper) in the country’s expansion, will issue El Salvador’s Bitcoin bonds.
At first look, the Central American country does not appear to be the most appealing place for foreign investment: its bonds had the poorest performance in the world last year, according to Bloomberg. Only time will tell whether their cryptocurrency-backed bonds outperform traditional bonds.