El Salvador is continuing to integrate Bitcoin at a rapid pace. Following the passage of a BTC law that made the cryptocurrency legal tender, the Central American country and its administration announced incentives for crypto investors and businesses, as well as a BTC mining program using its volcanic energy and BTC bonds.
According to Bitcoinist, the Bitcoin-based financial instrument will be worth $1 billion. The bonds will be paid by taxes and will mature after a decade with a 6.5 percent annual return on investment.
The financial instrument will be among the first to be backed by Bitcoin and issued by a government. Furthermore, they will assist El Salvador in financing their Bitcoin city project, which is estimated to cost 300,000 BTC.
In an interview with local news outlets, El Salvador’s Finance Minister, Alejandro Zelaya, discussed the country’s economic expectations for 2022, its entry into the crypto market as a national economic engine, and their BTC-related plan.
Zelaya confirmed that the government will send 20 bills to El Salvador’s Congress in that letter. The bills will be to rollout to create the legal framework that will support their Bitcoin bonds.
According to the government official, the uniqueness of this financial instrument necessitates the need to “control it.” Furthermore, the laws will provide the legal framework that will allow El Salvador to get $100 million from a regional financial organization. Zelaya stated:
(The Bitcoin Bonds) need a regulation, a legal framework because we don’t have a law to issue crypto backed securities, we don’t have a law to oversee exchanges (…). These is the type of legislation that we will send to Congress to provide a legal framework and legal certainty to everyone that will buy the Bitcoin bonds (…).
How Bitcoin Will Aid El Salvador’s Financial Modernization
El Salvador’s Finance Minister stressed that the country’s securities and investment legislation are out of date. The new bills will allow the country to strengthen the enforcement of their BTC strategy by supporting their BTC bonds and luring new capital into the country, which will be impossible under current regulations, according to Zelaya:
El Salvador has become a hub for cryptocurrencies and for crypto related operations (…).
The Bitcoin bonds and bills will enable individuals and organizations, particularly foreigners, to invest in Bitcoin-backed investment instruments. To launch this financial product, the Central American country has collaborated with Blockstream and its CSO Samson Mow.
According to Zelaya, they will meet with investors interested in purchasing the BTC Bond today, January 4th. The government official anticipates more buying interest in the bonds and, in a humorous tone, suggested that El Salvador may pay off its external debt with BTC-backed bonds. He continued, saying:
Only time will tell (if that prediction will come true). Right now, we are focused on structuring the first operation with a coupon a 6.5% interest with a 10-year issuance. $500 million will be used in infrastructure, another $500 will be used to buy Bitcoin (…).
As of press time, BTC is trading at $46,331 with a day-to-day movement of sideways.