El Salvador’s Bitcoin-backed bond may be delayed due to uncertainty surrounding Russia’s war against Ukraine.
Key Takeaways
El Salvador’s Minister of Finance has said that the country’s Bitcoin bond was nearly ready, but that the war in Ukraine has affected its timeline.
$1 billion in Bitcoin bonds are intended to fund the city’s so-called “Bitcoin City.”
The government’s tactics surrounding Bitcoin adoption have been criticized.
El Salvador is waiting to release its Bitcoin-backed bond pending developments in the Russian invasion of Ukraine. The Bitcoin-backed bond is meant to be used to fund the nation’s “Bitcoin City,” as well as allow for more purchases of Bitcoin.
$1 Billion Bitcoin BondIt seems as if global events are getting in the way of the Central American country’s “Bitcoin City.”
Per Reuters, El Salvador is weighing international events as it considers the timeline for its Bitcoin-backed bond release. According to the country’s finance minister, Alejandro Zelaya, the Bitcoin-backed bond could launch in days, but the war in Ukraine was a surprise:
“We believe that between Mar. 15 and 20 is the right timing, we have the tools almost finished. But the international context will tell us…I didn’t expect the war in Ukraine.”
Last November, El Salvador’s president, Nayib Bukele, announced “Bitcoin City,” which would be located close to the Conchagua volcano. The volcano would be used to power the city—as well as mine Bitcoin—through geothermal energy.
On Jan. 4, around 20 bills surrounding a Bitcoin bond had been prepared for El Salvador’s Congress. The Bitcoin-backed bond would be known as EBB1, and the government plans to issue $1 billion worth of Bitcoin-backed bonds, half of which would go toward buying Bitcoin and the other half toward energy and mining infrastructure. Blockstream would develop the bond on Liquid Network, a Bitcoin Layer 2 scaling solution.
As of Jan. 24, El Salvador had bought 1,801 Bitcoin at an average price of $49,100 each. The nation adopted Bitcoin as legal tender in September 2021, for which it received criticism domestically and from abroad, in part due to the heavy handed nature of the crypto rollout. Thousands protested in El Salvador, and the International Monetary Fund has been critical of Bitcoin’s status as legal tender as well as the planned Bitcoin bond.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
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