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El Salvador’s $1 billion Bitcoin bond shall be backed by the country’s volcanos that generate large geothermal energy.
El Salvador has put some breaks to the much-awaited launch of its $1 billion Bitcoin volcano bond. On Tuesday, March 22, Finance Minister Alejandro Zelaya said that the government has decided to wait for favorable market conditions.
As per the previous report, El Salvador was supposed to launch its Bitcoin bond between March 15-March 20. Bitcoin has corrected more than 40% from its all-time high last November. The Fed’s hawkish stand among rising interest rates and the geopolitical uncertainty has added to the volatility.
Zelaya said that now won’t be the right time to issue the Bitcoin bond, however’ adding that they are “ready”. During his interview with a local television channel, Zelaya said that the ideal time would be by mid-2022.
“In May or June the market variants are a little different. At the latest in September. After September, if you go out to the international market, it is difficult (to raise capital),” he added.
The Finance Minister also said that once the government gets the required nod from President Nayib Bukele, they would go ahead with the launch. He also said that the war in Ukraine has popped as an unforeseen factor affecting the crypto market.
Is El Salvador Really Ready for Its Bitcoin Bond?
El Salvador’s $1 billion Bitcoin bond shall be backed by the country’s volcanos generating large geothermal energy. With this money in hand, El Salvador plans to restructure its national debt. It also seeks to reward the participants at the same time.
However, the government doesn’t seem fully prepared for the launch of its Bitcoin bond. It has yet to create the legal framework required for Bitfinex Securities to get a license to issue these bonds. Zelaya said that El Salvador is planning to issue these bonds through the geothermal energy company LaGeo.
This company is controlled by state-run enterprise the Comisión Ejecutiva Hidroeléctrica del Río Lempa (CEL). “If LaGeo issues it or the state of El Salvador issues it, at the end it is always a state debt,” Zelaya said. Zelaya also noted that the government plans to provide a sovereign guarantee for the bonds.
The government is claiming that it has a good interest from investors for the Bitcoin bonds. However, most institutional investors have been waiting on the sidelines awaiting what response does it get from the crowd.