The technical director of the exchange Bitfinex claimed that the long-awaited Bitcoin (BTC) bonds in El Salvador will be launched this year “between June and September”. But the issuance of these marketable securities, he explained, could take the form of digital securities instead of bonds.
During Paris Blockchain Week, Paolo Ardoinothe CTO of Bitfinex, explained that El Salvador has finalized a law that will allow the issuance of digital securities.
Criptonoticias reported that this law has now been passed by the National Assembly, and added that the country was also working on creating an entity “that regulates such assets” – suggesting it could be the last necessary step before issuing.
Bitfinex’s CTO, however, hinted that the offering might not come in the form of bonds. Instead, El Salvador could decide to issue “stocks” or “digital securities.”
Ardoino explained:
“When the idea of creating bitcoin bonds was floated, US Treasury interest rates were much lower. And this product, the bonds, would have generated a return of 7% per year.”
But the technical director added that with interest rates “today reaching 4.5%”, it would be “difficult to sell these bonds with a yield of 7%”.
He claimed that “the preference of investors” was to see the bonds issued “like stocks”.
Mr. Ardoino said:
“The feedback we’ve had from potential investors is that they would like to see (these bonds in a form) closer to digital shares of an energy company operating in El Salvador, or a mining company [BTC].”
Bitfinex’s Role in El Salvador’s BTC Bond Issuance
The bonds will be available on the Bitfinex exchange, and the company has been working on this project – among others – with the Central American country.
Salvadoran President Nayib Bukele granted Bitcoin legal tender status in September 2021. Plans to create BTC bonds were announced soon after.
The National Assembly followed with legislation that will allow the state to issue bonds in BTC. But with the collapse of the markets following the crypto winter, the government has repeatedly postponed this issuance.
The offering was dubbed “Volcanic Bonds”, in honor of the country’s many volcanic mountains and the ambitious Bitcoin City project.
Mr. Bukele has announced his intention to use the money raised from the sale of the bonds to create a tax haven for international bitcoiners. The city will be built at the foot of a volcano, and a geothermal power plant at the top will mine bitcoins.
Bukele and Bitfinex said they hoped the deal would raise around $1 billion.
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