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January 17, 2022
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El Salvador Prepares Regulatory Framework To Issue Controversial Bitcoin Bonds

Will the plan work? Soon, the Bitcoin Bonds will get the authorized basis they want. In a latest TV interview Alejandro Zelaya, El Salvador’s Finance Minister, stated they are going to ship the mandatory payments to Congress. Soon. Reportedly, El Salvador will initially difficulty $1B value of bonds, which can have a ten-year maturity and carry a 6.5% coupon. The bitcoin that backs them will probably be locked for 5 years.

The challenge, introduced by President Bukele at Labitconf 2021, consists of plans to construct Bitcoin City. More on that later. In a scheme worthy of MicroStrategy, El Salvador will spend half of the cash on the development of Bitcoin City and can purchase Bitcoin with the opposite half. Will the plan work? Well, they should promote the bonds first. And for these to exist, a regulatory framework is required.

BTCUSD price chart for 01/06/2021 - TradingView

BTC price chart for 01/06/2021 on OkCoin | Source: BTC/USD on TradingView.com

What Did El Salvador’s Finance Minister Say About The Bitcoin Bonds?

In an interview within the native TV present “Frente a Frente,” Zelaya introduced the plan’s following steps. Reuters studies:

“El Salvador’s government will send to Congress about twenty bills covering financial markets and investment in securities to provide a legal foundation for issuing bitcoin bonds, Finance Minister Alejandro Zelaya said on Tuesday.”

The Finance Minister didn’t specify precisely when they are going to introduce the payments. According to El Salvador In English, Zelaya stated, “This type of legislation is what we are going to send to the Legislative Assembly to be able to give legal scaffolding and legal certainty to all those who buy the Bitcoin bond.”

Through the Ministry of Finance’s Twitter, they quote Zelaya being much more daring. “El Salvador could become a regional center where other countries can issue debt, we have great advantages such as having a dollarized economy and being pioneers regarding crypto.”

Adding gas to the fireplace, President Bukele stated through Twitter, “It’s to cover and guarantee the Bitcoin Volcano Bonds, but also a full re-engineering of the economy and of the way a nation state does business.” Not happy with that bomb, he added, “Everybody searching for freedom: this is the place to come.”

What About Bitcoin City? Is That A Go?

The Bitcoin Bonds will finance the development of Bitcoin City, however, what’s that precisely? When President Bukele introduced El Salvador’s plans, NewsBTC well timed reported: 

“According to Bukele, Bitcoin City will be a full-fledged metropolis with residential and commercial areas. It would also have shopping centers, restaurants, a port, an airport, and railway services. There would be no income, property, capital gains, or payroll taxes. Residents would, however, be subject to just value-added tax (VAT). This tax will go towards paying for the municipality’s bonds, public infrastructure, and city maintenance.”

However, extra not too long ago, an investigative report by podcaster Anita Posch solid doubt upon the Bitcoin Bonds and the entire enterprise:

“Apparently, the seemingly advanced plan for Bitcoin City was a collage. “At least some of the Bitcoin City presentation slides were downloaded from the internet and there was no detailed plan behind the announcement.” Not solely that, the construction behind the Bitcoin bonds that can finance the entire operation was additionally improvised. “The way the Bitcoin bonds will work was finally decided only a few minutes before Samson Mow took the stage.”

However, the plan is a go, and Blockstream’s Samson Mow is all-in on it. He not too long ago tweeted the trailer for an upcoming documentary on El Salvador and its Bitcoin City plans. In the tweet, he threw an especially optimistic, “Bitcoin is going to save the world and it starts here in El Salvador.”

Will the plan work? Is Bitcoin City an actual challenge or a rapidly put collectively mess? Do the Bitcoin Bonds provide a excessive sufficient return? Or are the Bitcoin Bonds too dangerous? Wouldn’t it’s higher for an investor to simply purchase bitcoin with that cash? Or are we lacking one thing? 

To reply all these questions and extra, El Salvador wants a regulatory framework to difficulty the Bitcoin Bonds. And the roughly twenty payments that assure which are on their option to Congress.

Featured Image by Wilson Edilberto Santana Suarez on Unsplash | Charts by TradingView

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