El Salvador government clarifies: It is not yet time for Bitcoin bonds
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Answer El Salvador government clarifies: It is not yet time for Bitcoin bonds
The government of El Salvador continues to delay the issuance of long-awaited Bitcoin bonds due to lower prices, as indicated by the Finance Minister during a recent interview.
On June 1, Alejandro Zelaya, El Salvador’s finance minister, stated that it was not yet time to launch Vulcano bonds (Bitcoin bonds) because the price of Bitcoin was still volatile.
For information, this is the second time that the government has postponed the date of issuing bonds, as the Minister of Finance said in the same the interview:
Still…this is not the time.
Contrary to previous interviews, Mr. Zelaya did not mention any tentative release date this time around.
Read:Study: Switzerland has the “most profitable bitcoin traders” and France is the best country for bitcoin trading
Bitcoin Bond Risks:
Although, so far, the government has not announced a specific date for the bond launch, it is worth noting that despite the pressure of investors and crypto enthusiasts, the government cannot handle the bond launch easily because these bonds will owe the country.
It is wiser for the government to wait for the bitcoin price to recover, as it is not the same as returning a billion debt with bitcoin price at 60,000 than doing so with bitcoin trading at $30,000.
They will have to pay double when the bonds mature because investors are not buying bitcoin but commitments paid in fiat currency (dollar).
Ricardo Castaneda, an economist at the Central American Institute of Fiscal Studies (ICEFI), told The Block:
El Salvador should cover $800 million in debt in January.
At the moment, the country does not guarantee access to this money.
Therefore, the president should raise as much money as possible through these bonds without getting too deep into debt territory.
For now, the government is maintaining its forecast to issue a total amount of $1 billion in bitcoin bonds.
Read:Digital currencies enter the world of central banks to replace cash
El Salvador continues to buy Bitcoin:
Despite the sharp decline in Bitcoin after reaching $69,000, President Najib Bukele and his advisors continue to rely on Bitcoin.
Read:Morgan Stanley submits a request to the SEC to approve bitcoin investment funds
So far, El Salvador has more than 2,301 bitcoins, and Bukele remains loyal to his strategy of buying dips and bottoms.
Minister Zelaya told El Salvador that El Salvador has plans to sell the cryptocurrency it bought despite it having earlier sold a surplus of around $4 million in bitcoin.
So, although there is no definitive launch date for the bonds yet, it is likely to take place before the end of 2022 to cover external debt and prepare for the construction of Bitcoin City, an ambitious project that exploits crypto-volcano mining and encourages the creation of a crypto-lover’s paradise.
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