El Salvador’s government has moved forward with plans to issue Bitcoin bonds by drafting 20 legislation that would serve as a legal framework for them.
According to Head of El Salvador Treasury Alejandra Zelaya, to ensure the feasibility of the Bitcoin bonds proposed in November 2021, the bills will contain procedures for issuing securities as cryptocurrency. However, he did not provide a date for the legislation to be submitted to lawmakers.
These $1 billion bonds will be used to fund El Salvador’s Bitcoin City, which was announced in November 2021, as declared by the country’s president.
The Bitcoin City will be built near the Conchagua volcano in southeastern El Salvador. It will have residential and commercial areas, services, entertainment, restaurants and an airport. Construction will begin in 2022 and the city will have no taxes except value-added tax (VAT).
Furthermore, a Bitcoin mining operation that uses geothermal energy generated by a volcano to power mining rigs has earned the bonds the name “Volcano Bonds.” The first 0.00599179 Bitcoin was minted on October 1st, 2021.
The proceeds from the bond sale might be used to pay an $800 million Eurobond that will be due in January 2023. Zelaya stated that the country would need to find financiers to help them meet their obligations to pay off the Eurobonds, which might come from Bitcoin bonds or “institutional offers from various investment banks.”
Investors are interested in the Bitcoin bond because it provides exposure to BTC and has a 10-year maturity with a 6.5% interest. Blockstream’s Liquid Network is planned to issue the bonds, which will be processed by iFinex.
Nayib Bukele, President of El Salvador, has tweeted about his 2022 predictions on January 2nd.
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