• Sun. Oct 1st, 2023

El Salvador Delays its ‘Volcano Bonds’ Launch



Mar 24, 2022

Since no official announcements have been made in this regard, it appears that the government in El Salvador has delayed the launch of their so-called ‘volcano bonds’. Alejandro Zelaya, the Finance Minister of El Salvador, had earlier reassured the public that they would initiate the project from March 20th. On Friday, the finance minister of the country had spoken about the matter once again and said that the launch of the bonds would take place somewhere between March 15th and March 20th. He had mentioned the same dates in a previous appearance he had made on TV in February.

However, this time Zelaya had talked about the unstable political situation that seemed to be unfolding in the world and said that this was one of the factors that could affect the timing of the bonds’ launch. NayibBukele, the President of El Salvador, had introduced the project of a ‘Bitcoin City’, which would be coin-shaped. It was to be launched at the Conchagua volcano’s base and the concept had been launched in November 2021. Bukele had stated that this new town would be constructed with minimal taxes and crypto mining operations and they would issue $1 billion in bonds for financing the project.

Since then, these bonds have come to be known as ‘volcano bonds’ or ‘Bitcoin bonds’ and they are supposed to last for about 10 years. As for the interest rate, this would be around 6.5% annually. For launching the bonds, El Salvador has entered into a partnership with Blockstream. The company’s chief strategy officer, Samson Mow had said back in December 2021 that they had received ‘soft commitments’ worth $300 million and they had come from whales of Bitfinex. Blockstream’s marketing director, Fernando Nikolic had said in February that the company would make an announcement regarding this matter in the first quarter of 2022.

However, reports indicated that the legislation necessary for launching the sale of the bonds has not passed through the parliament in El Salvador. Nikolic had stated that Blockstream was not aware of the new launch dates of the bonds because they are not collaborating directly with the country for offering EBB1. He said that they would just issue them on the Liquid Network and members distributed geographically around the world operate this. He added that Blockstreamonly operates as the technology provider in this scenario, so they would issue the bonds on Liquid, whenever they are ready.

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Meanwhile, it appears that El Salvador’s neighboring country Honduras is also drawing inspiration from the country and is about to become the world’s second country to introduce Bitcoin (BTC) as legal tender. They would accept the pioneer crypto as a payment method. The president of Honduras, Xiomara Castro has reportedly said that they don’t want their neighbor to be the only country to get out of dollar hegemony. Reports have said that there could also be a possibility of Malaysia looking to take similar steps, but there has been no confirmation about the matter from any authorities as yet.


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