Key Takeaways:
- Bitcoin bond bills will be submitted to Parliament in El Salvador, according to the Finance Minister.
- President Nayib Bukele is optimistic that bitcoin’s upward trend would continue this year.
- His administration is attempting to increase bitcoin investment by issuing bonds to both institutional and ordinary investors.
El Salvador is now establishing a legal framework for the previously announced bitcoin bonds. With a 6.5% coupon, the bitcoin bond would be worth $1 billion. The bonds will be used to support the forthcoming Bitcoin city and the government’s purchase of more bitcoin. In addition, the bonds will generate half of the revenue, which will create mining infrastructure.
According to Finance Minister Alejandro Zelaya, the administration will bring 20 bond-related bills to Congress for approval. The proposals, according to Zelaya, will create a legal framework for issuing bonds. This will help build trust in the bonds from a legal sense.
The bonds allow investors to invest in bitcoin without being exposed to the currency’s high volatility. According to President Nayib Bukele, the bonds will be issued this year, and the building will begin. According to the president’s administration, Bitcoin is expected to help the country’s economic growth. President Bukele is confident that bitcoin’s price will continue to rise. Experts have told him that it will, although they have warned him about bitcoin’s volatility.
The bonds’ technical consultant is Blockstream, and the bookmaker is Bitfinex. According to Samson Mow, as of December 7, 2021, investors in the bitcoin bond had orally pledged $300 million to invest in the bonds. The bonds are aimed at both institutional and retail investors and regular individuals. The bond would be sold in $100 tranches, according to Mow, to “democratize access to the bond.”
Bukele’s intentions to develop Bitcoin City have been questioned by a Johns Hopkins University economics professor.
“Tyrant Bukele has announced plans to establish a Bitcoin city…this is a ridiculous political ploy perpetrated by a deluded dictator.” Why isn’t [he] concentrating on what Salvadorans genuinely require, such as healthcare?”
President Bukele offered some fascinating bitcoin forecasts for 2022. He predicted in a tweet that bitcoin would reach $100,000, that two more countries would adopt Bitcoin as legal tender in 2022, that it would become a “major electoral issue in US elections this year,” that the Bitcoin City would begin construction, and that the bitcoin bonds, dubbed “Volcano bonds,” would be oversubscribed.
