El Salvador is gearing up for the launch of its highly anticipated ‘Volcano Bonds,’ a Bitcoin-backed bond initiative, following official regulatory approval.
The Digital Assets Commission of El Salvador has reportedly greenlit the Volcano Bond, targeting its debut in the first quarter of 2024, as per a Dec. 11 announcement by The National Bitcoin Office (ONBTC).
Nayib Bukele, the nation’s Bitcoin-enthusiast president, also appeared to confirm this development, sharing a message hinting at the bond’s imminent launch and reiterating its planned issuance in the early part of 2024.
The concept of the Volcano Bonds was first proposed in November 2021, and El Salvador subsequently passed crucial legislation on Jan. 11 to establish a legal framework for this Bitcoin-backed financial instrument. The primary objectives of the Volcano Bond are to alleviate national debt and finance the development of the proposed ‘Bitcoin City.’
According to ONBTC, the bond will be issued on the Bitfinex Securities Platform, a blockchain-based trading platform for equities and bonds, which is registered in El Salvador. This move marks the commencement of Bitcoin-oriented capital markets within the nation. The bond is set to have a 10-year duration, offering an annual return of 6.5% to its investors.
El Salvador has also embarked on a significant Bitcoin mining project, leveraging a 241-megawatt capacity and valued at $1 billion. This project aims to utilize the geothermal energy of the Conchagua volcano, in partnership with Luxor Technology, to power the country’s Bitcoin mining operations.
This regulatory approval arrives nearly two years after Alejandro Zelaya, the former finance minister of El Salvador, initially projected a mid-March 2022 launch for the Volcano Bond.
In addition to the regulatory approval of the Volcano Bonds, El Salvador’s Bitcoin investment has rebounded into profitability amid the recent crypto market resurgence. President Nayib Bukele reported a net profit of $3.6 million on their $131 million Bitcoin holdings, marking a 2.84% gain. Bukele reaffirmed the country’s commitment to holding Bitcoin, emphasizing that short-term market fluctuations do not impact their long-term investment strategy.