Bhushan Akolkar
The Latin American country El Salvador is closer to realizing its dream of creating the Bitcoin City. As per reports, crypto exchange Bitfinex will issue the country’s long-awaited “volcano” tokens this year in 2023.
The Volcano token is basically a Bitcoin bond issued using blockchain technology and will trade on the Bitfinex exchange. Paolo Ardoino, the Chief Technology Officer at Bitfinex said that he sees sufficient demand for the proposed $1 billion Bitcoin bond for El Salvador.
Last month in December, El Salvador passed its controversial Digital Assets law. Under this law, the country would need to create a digital securities regulator and also draft the prospectus for potential investors of the $1 billion bond.
Ardoino said that Bitfinex will later apply to this securities regulator to secure a license wherein the exchange can trade securities. “We are on the right track now in order to make things happen in a more timely fashion,” Ardoino said.
El Salvador’s Volcano Bond and Bitcoin City
Of the $1 billion raised through the sale of its Volcano tokens, El Salvador is planning to use half i.e. $500 million for building a tax-free coastal town dubbed Bitcoin City. This city will basically leverage the country’s excess geothermal energy from nearby volcanic locations to mine Bitcoins.
As per President Nayib Bukele’s plan, El Salvador will use another $500 million to purchase Bitcoin as part of the country’s reserves. Any future appreciation in the digital asset’s value will be shared with users.
El Salvador has faced major criticism over the last 1.5 years ever since making Bitcoin a legal tender. With the country’s exposure to the volatile asset class, there have been questions about the country’s debt repayment capabilities. But earlier this month, the country paid an $800 million bond along with interest upon maturity. Lashing out at all those past stories doubting El Salvador, President Nayib Bukele wrote:
In the past year, almost every legacy international news outlet said that because of our “#Bitcoin bet”. El Salvador was going to default on its debt by January 2023 (since we had an 800 million dollar bond maturing today). Literally, hundreds of articles.
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