Značka: Bitcoin bond

Bitcoin bond still on hold, El Salvador accused of human rights violations

El Salvador’s finance minister Alejandro Zelaya has said the country will further delay launching its anticipated billion dollar Bitcoin (BTC) bond citing price volatility and uncertain market conditions resulting from the ongoing Russo-Ukrainian war.The news comes at the same time that Amnesty International accused the Salvadoran authorities of “flagrant violations of human rights and criminalizing people living in poverty.”In a June 1 interview on the local “Frente a Frente” (Face-to-Face) news program Zelaya was asked if the situation with the $1 billion Bitcoin bond issuance from a “few months ago” had changed.“No, not yet, the [Bitcoin] price continues to be disrupted by the war in Ukraine,” he said according to a rough translation. He added that “in the short term the variations are constant but in the long term it always tends to appreciate in value.”“There is a future and there is an economic innovation [in Bitcoin] that we must bet on.”The plan for the bond was originally announced in November 2021 by El Salvador’s president Nayib Bukele. Half of the $1 billion expected is to fund construction of a “Bitcoin City” built near a volcano with the idea that its geothermal energy could be harnessed for Bitcoin miners. The other half of the funds raised would be invested into Bitcoin.The $1 billion bond was originally scheduled to launch in mid-March 2022 but ​in an interview in March Zelaya delayed the launch citing price volatility, giving a possible launch date around June with a timeline extending until September 2022.Mounting fears that the country could default on an $800 million bond due in January 2023 caused rating agency Moody’s to downgrade El Salvador’s credit rating on May 4 citing “lack of a credible financing plan.”El Salvador’s government has been buying Bitcoin since September 2021 with Bukele announcing the country purchased a further 500 BTC on May 9, El Salvador is estimated to have lost more than $35.6 million from its BTC investments so far.Amnesty International: “Human rights crisis”Meanwhile, human rights advocacy non-profit Amnesty International accused El Salvador’s government of committing “massive human rights violations” through arbitrary arrests, ill-treatment and torture of prisoners.A state of emergency (SOE) was declared by President Bukele on March 27 due to a rising homicide rate which the government blamed on gangs and organized crime. The SOE has since been extended twice.The human rights group said the SOE changed laws and legal procedures which undermine the rights to defense, the presumption of innocence, effective judicial remedy and access to an independent judge.Related: El Salvador’s Bitcoin play: What does the current slump mean for adoption?During the crackdown more than 35,000 people have been imprisoned in less than three months with the increase in arrests causing 1.7% of the country’s population over 18 years old to be in detention, resulting in overcrowding of over 250% of the prison capacity.0 homicidios.#Seguimos https://t.co/Dzcs18bjpA— Nayib Bukele (@nayibbukele) June 2, 2022But despite the abuses, many El Salvadorians agree with Bukele’s harsh measures as the President remains popular in opinion polls. The most recent poll released by local media on June 1st show a nearly 87% approval rate for the current president.

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El Salvador prepares 20 bills to provide legal framework for Bitcoin bonds

El Salvador’s government, led by President Nayib Bukele, has moved ahead with plans to issue Bitcoin bonds by preparing 20 bills designed to provide a legal framework for them.Head of the Treasury Alejandra Zelaya told El Salvadoran media El Mundo on Jan. 4 that the bills will cover regulations about issuing securities as cryptocurrency to ensure the viability of the Bitcoin bonds that were proposed in Nov. 2021. He said:”[This is] to provide a legal structure and legal certainty to everyone who buys the Bitcoin bond.” However he did not propose a timeframe for the legislation to be submitted to lawmakers.The $1 billion sought by the bond issuance would be used to fund the Bitcoin City initiative which President Bukele has promised will provide “digital and technological education, geothermal energy for the entire city, and efficient and sustainable public transport.”One of the features of the Bitcoin City is a Bitcoin (BTC) mining operation that harnesses the geothermal power generated by a volcano to power the mining rigs — leading to the bonds being dubbed “Volcano Bonds.” The mining operation mined its first 0.00599179 Bitcoin on Oct. 1 2021.Funds from the bond issue could also be used to pay down an $800 million Eurobond issue which will mature in Jan. 2023. Zelaya told El Mundo that the country would need to find financiers to help fill their obligation to pay off the Eurobonds which could come from Bitcoin bonds or from “institutional offers from various investment banks,” rather than another Eurobond issue.“We can simply make payments without creating another Eurobond in the traditional market, and we can find a bond that is denominated in dollars and receives payment in Bitcoin.”A Eurobond is a debt tool for countries to raise funds in a denomination other than its own currency.Zelaya also indicated that there is significant interest in the Bitcoin bond from investors as it offers exposure to BTC and a 10-year maturity of 6.5% interest.Related: President Bukele predicts Bitcoin rally to $100K, further legal adoption and moreThe issuance of Bitcoin bonds would not, however, preclude the Central American nation from participating in traditional finance. Zelaya said “We are not going to abandon the traditional market.”Notable partners with El Salvador in the creation of the Volcano Bonds include blockchain developer Blockstream and iFinex, which is closely related to stablecoin Tether (USDT). The bonds are expected to be issued on Blockstream’s Liquid Network and processed by iFinex.President Bukele tweeted his 2022 predictions on Jan. 2 that “Bitcoin City will commence construction,” and “Volcano bonds will be oversubscribed.”2022 predictions on #Bitcoin:•Will reach $100k•2 more countries will adopt it as legal tender•Will become a major electoral issue in US elections this year•Bitcoin City will commence construction•Volcano bonds will be oversubscribed•Huge surprise at @TheBitcoinConf— Nayib Bukele (@nayibbukele) January 2, 2022

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