El Salvador has approved a bill that will allow the country to sell Bitcoin-backed bonds, according to a Bloomberg report on Jan. 11.
The country’s Congress approved the bill with 62 votes in favor and 16 votes against. President Nayib Bukele must now sign the bill.
The proposed bonuses are part of a larger cryptocurrency strategy. El Salvador will allocate $500 million of the proceeds from those bonds to Bukele’s proposed plan to build a “Bitcoin City” near a coastal volcano called Conchagua. The city will harness clean volcanic energy to mine cryptocurrency and use Bitcoin as its primary currency.
The country will spend the remaining $500 million to buy more Bitcoin on top of the 2,381 BTC ($42 million) it has already bought. In fact, the country has committed to buying 1 BTC per day. Bondholders would reportedly benefit if the value of Bitcoin rises.
The El Salvador Bitcoin bonus has been a work in progress for some time now. Under Bukele’s leadership, El Salvador declared Bitcoin legal tender in 2021, and plans for the bond were first announced in November of that year.
Although the bond was expected to be filed in early 2022, market conditions delayed progress and the bond was expected to be filed in September 2022. However, the bond was delayed.again that month due to security concerns, according to statements from El Salvador partner Bitfinex.
Furthermore, it does not appear that El Salvador had any potential bond buyers until recently. In February 2022, reports indicated that the county had attracted $500 million in verbal commitments, with the possibility of winning a further $5 billion.
Despite the passage of the necessary bill today, it is unclear when the country could start issuing and selling bonds to buyers.
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