El Salvador to float $1 billion in bitcoin bonds on Liquid Network
The Salvadoran government has struck a deal with Blockstream and iFinex (the parent company of Bitfinex and Tether) to float $1 billion in bitcoin bonds on the Liquid Network.
According to the press release, half of the proceeds from the bond sale will be used to develop the first cryptocurrency's geothermal volcanic energy mining infrastructure. The other 50% will be used to buy digital gold for the state trust.
We have been negotiating with El Salvador for many months and have put a lot of effort into developing and modelling the bond. We believe the bond offering will appeal to a wide range of investors, primarily cryptocurrency investors as well as yield seekers, hodlers and ordinary people. The instrument has the potential to accelerate hyperbitcoinisation and lead to a new bitcoin-based financial system, Blockstream said in a statement.
Bitfinex Securities, a tokenised stock trading platform, will handle the processing of the issue. As part of the agreement, the latter will also help the Salvadoran government develop a regulatory framework for blockchain-based digital financial instruments.
Bitfinex Securities will be licensed to operate in the country once the new legal regime takes effect. The platform will become the exclusive partner of the government of El Salvador, according to iFinex.
Blockstream noted that the advent of the regulatory framework "could pave the way" for other tokens issued on the Liquid Network, like Blockstream Mining Note (BMN) or Exordium (EXO).
President Naib Bukele also announced the construction of Bitcoin City (Bitcoin City) along Fonseca Bay. A geothermal power plant will be built near a volcano in the region to supply the city with energy. It will also be used for bitcoin mining.
According to Bukele, Bitcoin City will be a full-fledged metropolis with residential and business districts, restaurants, an airport, a seaport and a railway station. The city will be recognised as a special economic zone with no taxes on income, property, capital gains and wages.