El Salvador’s eagerly anticipated Bitcoin bonds, also referred to as “Volcano Bonds,” have received regulatory approval, paving the way for their launch in early 2024. The approval, granted by El Salvador’s Digital Assets Commission in December, is a significant development in the country’s journey to embrace digital assets as a means to pay down sovereign debt and fund the construction of the proposed “Bitcoin City.”

Regulatory approval secured

El Salvador’s Digital Assets Commission has given the green light for the issuance of the much-anticipated Bitcoin bonds, colloquially known as “Volcano Bonds.” These bonds, designed to leverage the potential of digital assets, received regulatory approval in December  The National Bitcoin Office (ONBTC) officially confirmed the news in a statement.

Investors and cryptocurrency enthusiasts can look forward to the launch of the Volcano Bonds in the first quarter of 2024. El Salvador’s pro-Bitcoin leader, Nayib Bukele, also hinted at this development through a social media post where he enigmatically asked, “Wen volcano bond?” This was accompanied by reposts and mentions of the bonds’ anticipated issuance in Q1 2024.

El Salvador’s journey towards launching the Volcano Bonds began in November 2021 when the possibility of issuing such bonds first emerged. The pivotal moment occurred on January 11, 2022, when El Salvador passed groundbreaking legislation establishing the legal framework for Bitcoin-backed bonds. These bonds serve a dual purpose: to alleviate sovereign debt and fund the ambitious project of “Bitcoin City.”

Bitfinex securities platform chosen

The Volcano Bonds are poised to make their debut on the Bitfinex Securities Platform, a registered trading site for blockchain-based equities and bonds located in El Salvador. This move marks the inception of Bitcoin-based capital markets within the country, signifying a growing acceptance and integration of cryptocurrencies into the financial sector.

Investors in the Volcano Bonds can anticipate a decade-long commitment, as these bonds are set to have a maturity period of ten years. Furthermore, they will offer a competitive annual return of 6.5% to their holders. This attractive return rate may garner significant interest from both domestic and international investors seeking to diversify their portfolios.

El Salvador has recently embarked on a substantial Bitcoin mining project, valued at $1 billion, with a capacity of 241 megawatts. This ambitious venture harnesses the country’s abundant volcanic resources through a strategic partnership with Luxor Technology. The mining operations will be primarily powered by the Conchagua volcano, demonstrating El Salvador’s commitment to leveraging its unique geographical advantages for cryptocurrency mining.

The approval of the Volcano Bonds arrives nearly 21 months after the country’s former finance minister, Alejandro Zelaya, initially announced the launch date as mid-March 2022. The delay in the issuance of these bonds highlights the meticulous approach taken by the El Salvadoran government to ensure regulatory compliance and a secure investment environment for all stakeholders.