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El Salvador’s BTC Bonds Already Have $500 Million in Purchase Commitments

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The Salvadoran government already has $500 million in pledges to buy its BTC Bonds. That’s what Samson Mow, an executive at Blockstream, says, a company that helps the country issue bonds.

According to Mow, El Salvador has already received $500 million in “verbal commitments” to purchase. That is, it is not about real reserves yet. But the amount already represents 50% of the total of US$ 1 billion that the country plans to raise with the bonds.

If the purchase proposals are actually carried out, EL Salvador will already have enough money to build Bitcoin City, a city announced by President Nayib Bukele in 2021. The place will have a BTC focused economy, free of taxes and fueled by volcano geothermal energy.

Record capture?

BTC Bonds were announced in November as the first sovereign bonds issued on blockchain. Government of El Salvador said the bonds will be issued in the second half of March.

According to the Salvadoran government, the Bonds’ goal is to raise US$ 1 billion. Half of the funds will be used to buy more BTC, while the other half will finance the country’s energy mining infrastructure.

It is in this sense that Bitcoin City will be built, on the edge of a volcano. The vapors emanating from the volcano generate geothermal energy, supplying the city. That’s why are also called Volcano Bonds.

For Mow, El Salvador will have no problem raising the $1 billion in bond sales. In fact, Bukele also stated that he expects excess demand. That’s why the country is considering raising the funding target to US$ 5 billion in the future.

Split acceptance

Both Mow and Bukele are betting on the millions of bitcoiners around the world, as well as on the innovation of BTC Bonds. The Blockstream executive highlighted that the novelty of the bonds worked as a marketing campaign.

In a way, Mow compared BTC Bonds to memes, in the sense that both spread fast. He said that BTC enthusiasts are looking forward to the bonds and that is why optimism is high among Salvadoran politicians.

However, not everyone shares this optimism. Several risk agencies, such as Fitch and Moody’s, have already lowered the country’s risk ratings, placing it in a pre-default rating. The justification in all cases was the Bonds.

Fitch, for example, called the issuance of BTC Bonds “uncertain” and raised doubts about the country’s prospects for raising funds for the offering. As a result, the agency classified El Salvador bonds as “junk bonds” earlier this month.

But no one has criticized the country more forcefully than the International Monetary Fund (IMF). The agency suggested in January that El Salvador revoke the BTC Lawwhich gave the cryptocurrency legal tender status.

In response, Bukele gave FIM executives a harsh answer: “we are not your colony”. The declaration also targeted the United States, the country that effectively controls the IMF.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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