The Salvadoran government is in the process of drafting several bills to establish a legal and financial framework for the issuance of Bitcoin bonds (BTC) worth $ 1 billion, dubbed the ” Volcano bonds ” [littéralement traduits par « obligations volcaniques », NDLR], report Cointelegraph.
Bitcoin consolidates its positions in El Salvador
The Salvadoran government, headed by President Nayib Bukele, is preparing to issue Bitcoin bonds totaling $ 1 billion and is preparing 20 bills to establish a legal framework.
Alejandro Zelaya, head of the treasury, told the Salvadoran daily on Tuesday El Mundo that bills would aim to regulate the issuance of Bitcoin securities, proposed in November 2021, in order to ensure their viability.
“[Cette mesure est destinée] to provide a legal framework and ensure legal certainty for all who buy Bitcoin bondsZelaya explained. However, he did not specify when the legislation would be submitted to lawmakers.
Bitcoin Bonds Lay The Foundation For Bitcoin City Funding
President Bukele plans to invest a portion of the income from Bitcoin bonds in the development of a Bitcoin city that will offer “digital and technological education, geothermal energy for the entire population and efficient and sustainable public transport“.
The Bitcoin City will allow cryptocurrency to be mined by harnessing geothermal energy generated by a nearby volcano. This is why Bitcoin bonds are nicknamed “volcanic bonds“.
The funds from the Bitcoin bond issue could also be used to repay a Eurobond issue worth $ 800 million, which will mature in January 2023.
“We can just make payments without creating another Eurobond in the traditional market, and we can use a bond that is denominated in dollars, but can be settled in bitcoin.“
El Salvador has no plans to abandon the traditional financial system
Zelaya also indicated that investors are showing significant interest in Bitcoin bonds, as they are linked to the largest cryptocurrency and have a 10-year maturity with an interest rate of 6.5%.
However, issuing Bitcoin bonds will not prevent El Salvador from participating in traditional finance. “We are not going to abandon the traditional market», Said the head of the treasury.
To create the “volcanic bondsEl Salvador has partnered with the companies Blockstream and iFinex, the latter being closely linked to thestablecoinTether (USDT). The bonds will be launched on Blockstream’s Liquid network and processed by iFinex.
On January 2, President Bukele shared his forecast for the year 2022 on Twitter, saying that this year, “the construction of the Bitcoin city will begin” and “Bitcoin bonds will be oversubscribed“.
According to Salvadoran authorities, Bitcoin bonds have many advantages for investors, including low volatility and less risk.
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