El Salvador’s Digital Asset Oversight Board has given the country the green light to issue bitcoin-denominated government bonds.
El Salvador is once again taking the lead on Bitcoin and breaking the ultimate taboo. The country will soon issue treasury bills, government bonds, denominated in bitcoins. El Salvador’s Digital Asset Monitoring Board has given the green light to the country’s Ministry of Finance to issue government bonds denominated in bitcoins. These are “Volcano Bonds,” as the country’s president Nayib Bukele calls them, who has wanted them for two years.
This is a big victory for this craftsman and pioneer of Bitcoin, which will be introduced as the national currency from September 2021. It will be 10-year bonds with a rather generous coupon, yielding 6.5% per annum. They will be offered to investors on the Bitfinex platform.
1 billion dollars
El Salvador wants to raise at least $1 billion from this operation, which represents a little more than 4% of the country’s GDP, all of which is used to finance various Bitcoin-related projects. For example, the president of El Salvador wants to create a real “bitcoin city” where all financial infrastructure will be based on blockchain and bitcoin exchanges.
The operation also aims to increase the amount of bitcoins in El Salvador, the country holds around 2770, with the sale of these bonds mostly in bitcoins. This will bring new people to the country, but the appetite of investors remains to be tested. A few days ago, El Salvador was pleased with its first small gains from Bitcoin purchases in 2 years. This was when Bitcoin was above $44,000, but the current phase of decline and volatility could put a strain on this initiative.