This weekend, it was reported by Bloomberg, that El Salvador is preparing to launch a $1 billion bond – half of the funds will be used to invest in municipal infrastructure buildout and volcanic-powered Bitcoin mining without the need of income tax, sales tax revenue, or capital gains excise fees. The other half of the funding will go toward buying more Bitcoin. Here’s the initial announcement that was retweeted by El Slavador’s President, Nayib Bukele.
It’s reported that El Salvador will issue the $1 billion in funds as tokenized U.S.-dollar denominated 10-year bonds. The municipal paper is expected to pay 6.5 percent via the Liquid Network.
Earlier this year, El Salvador voted and deployed Bitcoin as legal tender in that country. The top cryptocurrency by market capitalization reached an all-time high of $69 thousand per coin a few weeks ago, before dropping approximately 20 percent since that peak on Nov. 10.
Bukele has been consistently purchasing more Bitcoin since its adoption as a method of payment in that country. Currently, El Salvador is hodling approximately 1,100 Bitcoin.
On The Flipside
- This marks the world’s first issuance of a Bitcoin-based municipal bond. It will be interesting to see how the International Monetary Fund and World Bank respond to this news as both organizations vocally opposed El Salvador’s adoption of Bitcoin as legal tender.
Why You Should Care?
- This latest development is likely to spark copycat-type funding rounds from other cities and nations.