Since 2021, President Nayib Bukele of El Salvador has invested over $120 million of the country’s funds in purchasing Bitcoin.
Now, the country’s “Volcano Bonds” have reportedly obtained regulatory approval and are set to be launched in early 2024.
The Volcano Bond has purportedly secured approval from El Salvador’s Digital Assets Commission, with an expected launch in the first quarter of 2024, as per a statement from The National Bitcoin Office (ONBTC) on December 11.
President Bukele, seemingly confirmed the news in a post of his own, saying: “Wen volcano bond?” while also reposting several posts indicating that the bonds will be issued in Q1 2024.
The possibility of El Salvador issuing the Volcano Bonds was initially discussed in November 2021 .
On January 11, El Salvador passed legislation establishing the legal framework for the Bitcoin-backed bond. The Volcano Bond aims to address sovereign debt and finance the development of the country’s proposed “Bitcoin City .”
ONBTC said that the bond will be issued on the Bitfinex Securities Platform, a blockchain-based equities and bonds trading platform registered in El Salvador.
This move marks the commencement of Bitcoin-based capital markets in the country. The bonds are designed to have a 10-year tenure and offer a 6.5% annual return to holders.
El Salvador has recently initiated a $1 billion Bitcoin mining project , harnessing 241 megawatts of power. The scheme, conducted in collaboration with Luxor Technology, will be fuelled by energy generated from the Conchagua volcano.
The regulatory approval for El Salvador’s Volcano Bonds arrives approximately 21 months after the country’s former finance minister, Alejandro Zelaya, initially indicated the launch for the Volcano Bond was slated for mid-March 2022.
A Bitcoin reserve Bukele acquired with public funds has recently turned profitable amid the ongoing upward trend in Bitcoin prices.
Bukele stepped down as president this week to campaign for a controversial second term.
According to a website monitoring his Bitcoin portfolio , the 2,764 coins he purchased became more valuable than the initial investment last week. If he were to sell them at the time of writing, he could potentially earn more than $4 million.
These figures are based solely on Bukele’s tweets announcing each purchase. The creators of the website remain unknown and were unavailable for comment.
At one point, Bukele’s Bitcoins had dropped to half of their initial value. However, in the past week, the price has surged to $44,000 per coin, possibly influenced by anticipated changes in cryptocurrency regulations in the United States.
Nevertheless, some economists in El Salvador and elsewhere argue that the moment is not as significant as Mr. Bukele portrays. The $120 million spent by his government to purchase coins represents only a fraction of the public funds used to promote Bitcoin to Salvadorans since the country became the first to adopt it as legal tender alongside the US dollar, its primary currency.