El Salvador’s Bitcoin ‘Volcano Bonds’ Receive Regulatory Approval for Q1 2024 Issuance

By Decrypt December 12, 2023 In Bitcoin, El Salvador
Bitcoin in El Salvador. Image: Shutterstock

El Salvador’s planned Bitcoin bonds have received regulatory approval from the country’s Digital Assets Commission (CNAD).

The country’s National Bitcoin Office (ONBTC) announced the news in a tweet, stating that it expects the bond to be issued “during the first quarter of 2024.”

“This is just the beginning for new capital markets on #Bitcoin in El Salvador,” the ONBTC added.

El Salvador’s President, Nayib Bukele, retweeted a number of posts confirming the news.

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El Salvador’s “volcano bonds”

The issuance of Bitcoin bonds has long been an ambition for Bukele, who first announced plans to launch them shortly after El Salvador’s Bitcoin Law made the cryptocurrency legal tender in 2021.

At the time, the plan was to issue $1 billion in bonds in 2022, with half converted to Bitcoin and the remainder used for infrastructure and Bitcoin mining.

Known as “volcano bonds,” from the proposed use of the Conchagua volcano to power Bitcoin mining rigs, the bonds were to be used to help build a “Bitcoin City,” a tax-free enclave for Bitcoin advocates.

However, the issuance of the bonds was postponed several times, with the country’s finance minister citing market volatility and the war between Russia and Ukraine as reasons for the delay. Legislation providing a legal framework for the Bitcoin-backed bonds was passed in January 2023.

The country’s plans to issue Bitcoin-backed bonds have caused friction with the International Monetary Fund (IMF), which has repeatedly called for El Salvador to reverse its Bitcoin Law, claiming that it “raises a number of macroeconomic, financial, and legal issues.”

El Salvador has continued to court the Bitcoin faithful, with the launch of a “freedom visa” program offering foreigners a passport and residency if they invest $1 million in Bitcoin or Tether in the country.

The country has also been stockpiling Bitcoin for its reserves, as a state-wide hedge against inflation. Bitcoin’s recent rally over $42,000 propelled El Salvador’s Bitcoin holdings into profit, though the cryptocurrency’s price has since slipped back to below that figure.

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