The government of El Salvador has struck a deal with Blockstream and iFinex (the parent company of Bitfinex and Tether) to issue $1 billion in Bitcoin bonds on the Liquid Network.
We’re excited to share our collaboration with the Republic of El Salvador for the #BitcoinBond, an issuance of $1B USD in tokenized bonds on @Liquid_BTC for acquiring #bitcoin and building out energy and mining infrastructure in El Salvador. 🌋⚡️ https://t.co/rDaCDdewSo pic.twitter.com/3VAC6MISSl
— Blockstream (@Blockstream) November 21, 2021
According to the press release, half of the proceeds from the bond sale will go to developing mining infrastructure for the first cryptocurrency using geothermal volcanic energy. The other 50% will go to purchasing digital gold for the state trust.
“We have been negotiating with El Salvador for many months and have put a great deal of effort into developing and modelling the bonds. We believe the bond offering will be attractive to a broad range of investors, primarily crypto investors, as well as those seeking yield, hodlers and ordinary people. The instrument could accelerate hyperbitcoinisation and give rise to a new financial system based on Bitcoin,” said Blockstream.
The issuance will be handled by Bitfinex Securities, the platform for trading tokenised securities. Under the agreement, the latter will also help the government of El Salvador develop a regulatory framework for digital financial instruments based on blockchain.
Once the new regulatory regime comes into force, Bitfinex Securities will receive a license to operate in the country. The platform will become the exclusive partner of the government of El Salvador, according to iFinex.
Blockstream noted that the introduction of a regulatory framework \”could pave the way\” for other tokens issued on the Liquid Network, such as Blockstream Mining Note (BMN) or Exordium (EXO).
President Nayib Bukele also announced the construction of Bitcoin City along the Gulf of Fonseca. To power the city, a geothermal power plant will be built near the region’s volcano. Its capacity will also be used for Bitcoin mining.
According to Bukele, Bitcoin City will be a fully-fledged metropolis with residential and business districts, restaurants, an airport, a seaport and a railway station. The city will be designated a special economic zone where income tax, property tax, capital gains tax and payroll tax are not levied.
In October, the Salvadoran state Bitcoin fund acquired an additional 420 BTC. The fund now holds 1,120 BTC.
As noted, a portion of profits from operations with the first cryptocurrency is used to fund the construction of 20 modern schools and a veterinary clinic.
Earlier, Ethereum founder Vitalik Buterin described the legalization of Bitcoin in El Salvador as ‘reckless’.
Read ForkLog’s Bitcoin news in our Telegram — cryptocurrency news, prices and analysis.