The groundbreaking ‘issuance of a bitcoin-backed bond’ by El Salvador has been delayed, as the government now wants to wait for conducive conditions in the financial market, Finance Minister Alejandro Zelaya said on Tuesday.
According to Zelaya, the bitcoin bond will have a “substantial oversubscription” that could reach $1.5 billion
The government had initially scheduled the launch of the $1 billion bond between 15-20 March, but the officials were prompted to change the date due to the war between Russia and Ukraine and the resultant volatility of the cryptocurrencies.
With the bond, the government intends to convert $500 million into Bitcoin and the other $500 million would be used to Build Bitcoin City. Holding on to the bond for at least five years, investors would receive dividends as El Salvador liquidates Bitcoin.
Strikingly, the plan has also been named as “volcano bonds” as it is proposed that the Conchagua volcano would be used as the power source for mining.
It is estimated that the launch of the bond could be postponed until September as Bitcoin has dropped suddenly since hitting a record high above $67,500 in November last year.
As a result of the market swooning, Bitcoin lost almost half its value by January 22, and traded at $42,609 on Tuesday.
Zelaya commented that the bond won’t be issued by the government but by the state-owned thermal energy company La Geo. However, the bond will have a sovereign guarantee provided by the Salvadoran state.
He further added that now is not the time to issue the bond, and the suitable date to go on the market is the first half of the year.
Last year, El Salvador had become the first country in the world to adopt bitcoin as legal tender, thus irking centralized institutions like the IMF that advised El Salvador to ditch Bitcoin as a legal tender. IMF further called BTC to be a major obstacle to getting a loan from the financial institution.