Bitcoin Denominated Bonds
El Salvador’s legislative body passed a law permitting the nation to issue bonds backed by Bitcoin (Bitcoin Denominated Bonds). The bill was ratified by a majority of 62 votes to 16 on January 11.
The National Bitcoin Office of El Salvador declared that they would begin issuing the bonds soon.
President Bukele has plans to raise $500 million through the Bitcoin denominated bonds to finance the development of a “Bitcoin City” in La Unión. This city will include residential and commercial spaces, museums, amusement venues, an airport, a railway, and other essential infrastructure. The proposed city designed in the form of a giant coin, symbolizing its Bitcoin connection.
The El Salvador government intends to raise an additional $500 million to put toward the purchase of Bitcoin, with any increase in the value of the digital currency to share with bondholders.
The launch of the Bitcoin denominated bonds estimated to take place in late 2022. However, it delayed due to the ongoing dispute between Russia and Ukraine. Credit rating agencies and the International Monetary Fund (IMF) have voiced their opposition to the plan, citing the risks it poses to financial stability and consumer protection.
Nevertheless, President Bukele has supported the adoption of Bitcoin. With his country officially recognizing it as a legal tender in 2021 and investing millions in the cryptocurrency.