El Salvador's Bitcoin Bond Issuance Coming This March

El Salvador eyes issuance of Bitcoin bonds as early as March 2022. SMEs will get crypto-backed loans with a complete change in the country's economy.

Bishal Kumar Chanda2 min read
El Salvador's Bitcoin Bond Issuance Coming This March

The El Salvadoran Finance Minister Alejandro Zelaya revealed that El Salvador's initial $1 billion bitcoin bond could occur between March 15 and March 20. It was a follow-up on El Salvador's announcement to provide crypto-backed loans for small and medium-sized businesses. He also revealed on the Salvadoran TV show "Frente a Frente" that the first bond would be launched on Liquid, Blockstream's bitcoin-based service. The bonds are said to meet all financial regulations with proper due diligence. Investors can take part with capital as low as $100, which is the initial value of the bond.

According to December reports from CoinDesk, Blockstream's chief strategy officer said that the band already has a soft commitment worth $300 million. When announcing the Bitcoin bond, President Nayib Bukele planned on using half of the funds to develop Bitcoin mining infrastructure and the remaining to buy Bitcoins to hold. Despite the IMF's public warning to El Salvador against the legalization of Bitcoin, Bukele stands firm with his decision.

Trade and Investment Secretariat Monica Taher announced that the bond would be issued through Bitcoin's Lightning Network. With Bitcoin bonds, El Salvador has the advantage of accepting payments in cryptocurrencies and Bitcoin. El Salvador plans on leveraging this to gain access to the capital market to raise its intended capital. In addition, exposure to the crypto market dramatically increases the possibility of selling the $1 billion Bitcoin bond.

Bukele's government firmly believes that they will raise approximately $1 billion to support their cause of building a tax haven for crypto advocates worldwide. However, some governments might try to block their citizens' access to these bonds. But it'll be challenging to enforce such a ban if the Lightning Network is used to accept Bitcoin payments. If executed successfully, this will be a revolutionary moment in the history of blockchain and cryptocurrencies. Will the El Salvadoran economy find the digital riches against all odds, or will their dreams come crashing down in the volatile crypto market? Stay tuned with Bitcompare to find out.

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