El Salvador’s Bitcoin-backed bonds – Volcano Bonds – that the Latin American nation wants to use to pay sovereign debt and fund the construction of the proposed Bitcoin City is now one step closer to becoming a reality.
The nation’s Digital Assets Commission has reportedly given the green light to the program, and it is expected to be rolled out in the first quarter of 2024.
El Salvador’s Volcano Bonds
According to an announcement on December 11 from The National Bitcoin Office (ONBTC), the bonds will be made available on Bitfinex Securities, a regulated segment of the crypto exchange Bitfinex.
Wen volcano bond? 🥺
— Nayib Bukele (@nayibbukele) December 12, 2023
In 2021, El Salvador achieved the historic milestone of becoming the first country to recognize Bitcoin as legal tender officially. While this decision earned praise from many within the Bitcoin community, it faced criticism from the World Bank, the International Monetary Fund (IMF), and global credit rating agencies.
However, President Nayib Bukele recently highlighted that El Salvador’s investment in Bitcoin has proven profitable, as the asset’s price surpassed the $40,000 threshold for the first time in nearly two years. The Latin American nation initiated its Bitcoin purchases in September 2021, and the current value of its holdings exceeds $130 million.
The “Volcano bonds,” introduced by Bukele in 2021 shortly after enacting the law recognizing Bitcoin as legal tender in the nation, aimed to raise $1 billion. These bonds were designed to support the development of a BTC mining industry powered exclusively by renewable energy, including that derived from the country’s active volcanoes.
Initially slated for issuance in March 2022, the launch was delayed multiple times. However, the digital assets bill was eventually presented in the Legislative Assembly in late November 2022, where Bukele’s party, Nuevas Ideas, holds a significant majority.
The subsequent approval of the digital assets law aimed at designing legal protection for transfers or issuances of debt with crypto in January this year provided the legal framework for Volcano Bonds as well.
Partnership With Tether
The development follows the El Salvador government’s partnership with stablecoin issuer Tether to introduce the “Adopting El Salvador Freedom Visa Program,” aimed at granting residency to a maximum of 1,000 individuals each year who commit to investing a minimum of $1 million in either Bitcoin or USDT stablecoins.
As reported earlier, applicants are required to submit a non-refundable deposit of $999 in either Bitcoin or USDT. Successful candidates must then undergo Know Your Customer (KYC) verification. This investment not only grants participants the Freedom Visa but also allows them to contribute to the nation’s advancement actively.
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