El Salvador's Bitcoin Volcano Bonds Receive Approval

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Bitcoin Bonds Given the Green Light in El Salvador

El Salvador is edging closer to realizing its ambitious plan to issue volcano Bitcoin bonds as it secures regulatory approval for the investment initiative. The National Bitcoin Office (ONBTC) of El Salvador recently announced that the Volcano Bond has received the green light from the Digital Assets Commission (CNAD), marking a crucial milestone in the project’s progression.

Set against the backdrop of El Salvador’s pro-crypto stance, the anticipated issuance of these bonds is slated for the first quarter of 2024, signifying the commencement of new capital market ventures tied to Bitcoin within the country. The regulatory approval paves the way for the bonds to be listed on the Bitfinex Securities platform, regulated by both Kazakhstan and El Salvador.

President Nayib Bukele enthusiastically confirmed the regulatory clearance, humorously asking “Wen volcano bond?” in a tweet early Tuesday morning. This development comes on the heels of the announcement of Bitcoin volcano bonds in 2021, shortly after the cryptocurrency was established as legal tender in El Salvador.

Originally aiming to raise $1 billion through these Bitcoin-backed bonds, the initiative is backed by El Salvador’s BTC mining industry, leveraging renewable energy harnessed from active volcanoes. Initially slated for a March 2022 launch, the bonds faced delays amid the challenges posed by the bearish market conditions. However, the regulatory landscape changed in November 2022 with the passage of crypto legislation, facilitating the necessary approvals.

Now scheduled for issuance in early 2024, the volcano Bitcoin bonds are designed to have a ten-year maturity, offering investors an attractive 6.5% annual return. This financial instrument represents a unique intersection of cryptocurrency, sustainable energy, and capital markets in El Salvador’s evolving economic landscape.

On December 8, El Salvador introduced a novel Freedom Visa and Citizenship program aimed at fostering visionary contributions to the nation’s economic development, cultural enrichment, and societal advancement. Notably, this Tether-backed initiative, however, is exclusively tailored for high-net-worth individuals, colloquially known as “whales,” requiring a substantial investment of $1 million in either BTC or USDT to qualify for the coveted visa, which subsequently leads to citizenship.

President Nayib Bukele has been actively accumulating BTC since September 2021, amassing a notable reserve of 2,770 BTC valued at approximately $115 million. Despite the strategic acquisitions, a significant portion of these purchases occurred during the bullish market conditions, resulting in the portfolio being in the red for the past two years.

BTC Investments Reach Breakeven Point

The turning point arrived last week when Bitcoin prices surged to $44,000, allowing the country’s cryptocurrency holdings to finally break even. However, the recent market turmoil induced by leverage-related liquidations has exerted downward pressure on BTC prices, causing the portfolio to dip by 2.1%. As per NayibTracker, the dollar-cost average price for President Bukele’s Bitcoin holdings stands at $42,436.

This juxtaposition of El Salvador’s innovative citizenship program and the fluctuations in its cryptocurrency portfolio underscores the dynamic nature of the country’s foray into the crypto space. The success and sustainability of such initiatives remain closely tied to the volatile cryptocurrency market, adding a layer of complexity to El Salvador’s evolving economic strategies.