President Nayib Bukele hopes that bitcoin will continue its up trend this year, as his administration looks to draw more investment in bitcoin via bonds targeted at institutional and retail investors.
The country of El Salvador is busy preparing to introduce a legal framework for the previously announced bitcoin bonds. The bitcoin bond would be worth $1B with a coupon of 6.5%. The bonds will be used to raise funds for the upcoming Bitcoin city and the government to buy more bitcoin. Half of the revenue generated from the bonds will be used to build infrastructure for mining.
Finance Minister Alejandro Zelaya announced that the government would send 20 bond-related bills to Congress for approval. According to Zelaya, the bills will provide a legal framework for issuing bonds. This will serve to foster confidence in the bonds from a legal standpoint.
The bonds provide investors a way to invest in bitcoin without exposing themselves to its sharp volatility. The bonds are expected to be issued this year, and construction will commence this year, according to President Nayib Bukele. The president’s administration is hopeful that bitcoin will boost the country’s economic growth. President Bukele is optimistic that bitcoin will maintain an upward trend in price. Experts have informed him that it will, although they do remind him of bitcoin’s volatility.
$300M already committed to bonds
Blockstream is the technology consultant for the bonds, while Bitfinex is the bookmaker. According to Samson Mow, investors in the bitcoin bind had verbally committed to $300M to invest in the bonds as of Dec. 7, 2021. The bonds are targeted at traditional and institutional investors and ordinary citizens. According to Mow, the bond would be sold in $100 tranches to “democratize access to the bond.”
Bukele’s bitcoin predictions for 2022
President Bukele made some interesting predictions about bitcoin in 2022. In a tweet, he predicted that bitcoin would reach $100K, that two other countries would adopt Bitcoin as legal tender in 2022, that it would become a “major electoral issue in US elections this year,” that the Bitcoin City will commence construction, and that the bitcoin bonds, dubbed “Volcano bonds” would be oversubscribed. A professor of economics at Johns Hopkins University called into question Bukele’s plans to build Bitcoin City. “Dictator Bukele has announced plans to build a Bitcoin city…this is an absurd political stunt by a delusional dictator. Why doesn’t [he] focus on what Salvadorans actually need, like access to healthcare?”
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Source: https://beincrypto.com/el-salvador-finance-minister-reports-bitcoin-bond-bills-to-be-submitted-to-parliament/