El Salvador continues to move fast into its Bitcoin integration. After the introduction of a BTC law that made the cryptocurrency legal tender, the Central American country and its administration promised incentives for crypto investors and companies, a BTC mining program using its volcanic energy, and BTC bonds.
As reported by Bitcoinist, the Bitcoin-based financial instrument will have an estimated value of $1 billion. The bonds will be funded via taxes and will expire after a decade with a 6.5% estimated yearly return on investment.
The financial instrument will be amongst the first to be backed by BTC and issue by a national government. In addition, they will help El Salvador to finance their Bitcoin city project which has a tentative cost of 300,000 BTC.
In an interview with local news media, the Finance Minister for El Salvador Alejandro Zelaya talked about the country’s economic expectations for 2022, its incursion in the crypto market as a national economic driver, and their BTC-related strategy.
Therein, Zelaya confirmed that the government will send 20 bills to El Salvador’s Congress. The bills will be to rollout to create the legal framework that will support their Bitcoin bonds.
The government official claimed that the novelty of this financial instrument creates the need to “regulate it”. In addition, the bills will create the legal net that will allow El Salvador to access $100 million from a regional financial institution. Zelaya said:
(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 Help El Salvador To Modernize Its Finances
The Finance Minister for El Salvador emphasized that their securities and investments laws are outdated. The new bills will allow the country to enhance the enforcement of their BTC strategy by supporting their BTC bonds, and attracting new capital into the country, something which under current laws will be too difficult, Zelaya said:
El Salvador has become a hub for cryptocurrencies and for crypto related operations (…).
The Bitcoin bonds and the bills will allow people and institutions, especially foreigners, to invest in BTC-backed investment products. The Central American country has been working with Blockstream and its CSO Samson Mow to issue this financial product.
According to Zelaya, today January 4th, they will meet with investors interested in buying the BTC Bond. The government official expects the bonds to receive more buying interest and hinted at the possibility, in a joking tone, that El Salvador could pay off its external debt with BTC-backed bonds. He added:
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 trades $46,331 with sideways movement in the past day.