Following the bold decision to become the first Central American nation to officially approve Bitcoin as legal tender, El Salvador has been planning to begin issuing Bitcoin bonds to revamp its struggling economy.
The Minister of Finance believes that the country is set to issue the first Bitcoin bonds to the public but will only do so at the right time. The unstable global economy and the rise and fall in the value of Bitcoin, coupled with the ongoing geopolitical unrest in Eastern Europe, have made the government halt the plan.
The Official Launch of Bitcoin Bond
It was previously reported that El Salvador would release the $1 billion Bitcoin Bond to the public between March 15 and 20. The Minister of Finance, Alejandro Zelaya, disclosed that the government is ready to issue the bond, but timing is everything. The minister of finance thinks that the time is not right. Zelaya, however, failed to reveal the new date for the bond issue.
When questioned by an interviewer, Zelayer responded by saying that he did not believe this was the perfect time to do so; the best thing was to wait for a couple of days before everything would be analyzed.
The Minister of Finance further added that this is not to say the bond issue is likely to happen in the next two to three days. Market conditions are peaking between March and April, and Zelaya wants the bond issue to begin before September.
In a previous TV broadcast, Zelaya disclosed that time is the critical factor here, citing the geopolitical conflict as a factor hindering the progress of the global economy. Several factors affect the official launch of the Bitcoin Bond, which are pending.
The Unfinished Legal Framework
Before announcing the bond sale, the El Salvadoran government had been working on ironing out the legal framework necessary for the service provider, Bitfinex Securities, to acquire an operating license.
The absence of an operation license indicates that Bitfinex Securities would not be able to publish a Disclosure Agreement to would-be investors and other information relating to its services.
According to the finance minister, the $1 billion Bitcoin bond is attracting so much interest that it may even be oversubscribed. Bitfinex Securities revealed that it has come up with an estimate of about a $500 million valuation for the proposed bonds.
El Salvador plans to issue the bonds through the state’s energy company, Leo. Leo is under another state-owned corporation, and both are expected to play a crucial role in the success of the bond sales at the scheduled time.
As it stands, El Salvador intends to be the first country to issue Bitcoin bonds to interested parties and investors to shore up its ailing economy.
The country’s decision-makers believe that issuing bonds is another way to consolidate the Central American nation’s drive for digital asset use with Bitcoin as a legal tender. For now, all eyes are on the day of the launch.
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