The government of El Salvador has moved ahead with plans to issue Bitcoin bonds by preparing 20 bills designed to provide a legal framework for them.
The head of the treasury Alejandro Zelaya, announced that the bills will cover regulations about issuing securities as cryptocurrency to ensure the viability of the Bitcoin bonds that were proposed in November 2021.
The $1 billion sought by the bond issuance would be used to fund the Bitcoin City initiative, which the President has promised will provide “digital and technological education, geothermal energy for the entire city, and efficient and sustainable public transport.”
One of the features of the Bitcoin City is a Bitcoin mining operation that harnesses the geothermal power generated by a volcano to power mining rigs — leading to the bonds being dubbed “Volcano Bonds.”
Funds from the bond issue could also be used to pay down an $800-million Eurobond issue, which will mature in January 2023.
Zelaya also stated that the country would need to find financiers to help fill their obligation to pay off the Eurobonds, which could come from Bitcoin bonds or from “institutional offers from various investment banks” rather than another Eurobond issue.
A Eurobond is a debt tool for countries to raise funds in a denomination other than their own currency. Zelaya also indicated that there is significant interest in the Bitcoin bond from investors, as it offers exposure to BTC and a 10-year maturity of 6.5% interest.
