El Salvador's finance minister, Alejandro Zelaya, announced today that the Central American country has postponed issuing its much anticipated Bitcoin-backed bond as it waits for market conditions to improve.
The government originally planned to issue $1 billion in bonds to investors between March 15 and March 20. The government intends to convert $500 million into Bitcoin and to use the other $500 million for infrastructure and Bitcoin mining. Investors hold on to the bond for at least five years—receiving dividends as El Salvador liquidates the BTC. The plan has also been referred to as "volcano bonds" from the proposed use of the Conchagua volcano as a power source for mining.
Zelaya says current market volatility and the war between Russia and Ukraine have prompted authorities to postpone the launch date, possibly until September. However, he says going out to the international market in the fall is difficult.
"Now is not the time to issue the bond," Zelaya said. He's still expressing hope for a release during the first half of the year.
When finally launched, El Salvador's Bitcoin bond will be issued by Blockstream, a Bitcoin infrastructure company aiming to expand Bitcoin adoption using the blockchain developer's Liquid protocol. The Liquid Network is a Bitcoin layer-2 enabling the issuance of security tokens and other digital assets.
Last year, El Salvador became the first country in the world to adopt BTC as legal tender. The move has garnered both praise from Bitcoin adopters and criticism from select politicians, government agencies, and the International Monetary Fund (IMF). The latter has, on more than one occasion, said El Salvador's embrace of Bitcoin raises "a number of macroeconomic, financial and legal issues."
And last month, a bipartisan trio of U.S. senators introduced the Accountability for Cryptocurrency in El Salvador (ACES) Act, which would mandate that the State Department create a plan to limit the risks to America's economic system caused by El Salvador's Bitcoin Law. The bill notes "significant concerns" with El Salvador's monetary policy.
In the time since El Salvador made Bitcoin legal tender in September, Bitcoin has hit an alt-time high of $68,000 but also declined to its current price of $42,414, according to CoinMarketCap.com.