El Salvador to push ahead with plans to issue Bitcoin-backed bonds | Invezz

El Salvador is inching closer to issuing Bitcoin (BTC/USD) bonds. The country’s finance minister Alejandro Zelaya disclosed this news during an interview with local media on January 4, noting that the government plans to send 20 bills to Congress to set the ball rolling. President Nayib Bukele confirmed this news on Twitter the same day.

In the interview, Zelaya pointed out that the bill would cover financial markets and investment in securities. By focusing on these areas, the bills would set a legal foundation for the issuance of BTC bonds. Through this framework, the country hopes to offer legal certainty to anyone that buys BTC-backed bonds.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

He added that,

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.

Zelaya, however, did not provide a timeframe for when the government seeks to submit the bills to the country’s legislators.

Setting precedence for mass BTC adoption

This news comes after El Salvador said its first sovereign BTC bond would be worth $1.00 billion (£0.74 billion) and would carry a 6.5% coupon. The central American country seeks to issue this bond this year and use the funds to develop the world’s first Bitcoin city at the base of Conchagua, a stratovolcano in southeastern El Salvador.

Specifically, El Salvador seeks to use half of the funds to build the city and the other half to purchase more BTC. The city will harness geothermal power from the nearby volcano and use the energy to run a mining operation. Notably, the operation mined its first 0.00599179 Bitcoin on October 1, 2021.

Apart from dedicating the funds to building the Bitcoin city and buying more BTC, El Salvador is also mulling paying an $800.00 million (£590.64 million) Eurobond issue, which matures in January 2023. Per Zelaya, El Salvador needs to find financiers to help it fill its obligation to pay off the Eurobonds.

While this support could come from institutional offers from investment funds, the country considers leveraging the BTC bonds a viable alternative.

Zelaya further noted that,

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.

Meanwhile, Bukele believes 2022 will be a good year for BTC, predicting that the flagship crypto will surge to $100,000.00 (£74,000.00). He also claims that two more countries might embrace BTC as legal tender this year.