El Salvador’s eagerly awaited Bitcoin bonds, colloquially known as “Volcano Bonds,” have secured regulatory approval for issuance in the first quarter of 2024. The country’s Digital Assets Commission approved on December 11, as revealed in a statement by The National Bitcoin Office (ONBTC).
El Salvador’s pro-Bitcoin leader, Nayib Bukele, seemingly confirmed the news in a social media post with the caption “Wen volcano bond,” sharing additional posts specifying the bonds’ anticipated launch in Q1 2024.
The concept of the Volcano Bonds first emerged in November 2021, gaining traction after El Salvador passed groundbreaking legislation on January 11 to establish the legal framework for the Bitcoin-backed bonds. The primary purpose of the Volcano Bond is to alleviate sovereign debt and finance the development of El Salvador’s envisioned “Bitcoin City.”
According to ONBTC, the bond is slated for issuance on the Bitfinex Securities Platform, a trading venue for blockchain-based equities and bonds registered in El Salvador. This move marks the initiation of Bitcoin-based capital markets in the country, with the bonds having a ten-year tenure and offering a 6.5% annual return to holders.
El Salvador recently inaugurated a substantial 241-megawatt Bitcoin mining project valued at $1 billion. This initiative facilitated through a partnership with Luxor Technology, harnesses the country’s volcanic resources, with the Conchagua volcano driving the mining operations.
The regulatory approval materialized nearly 21 months after the country’s former finance minister, Alejandro Zelaya, initially projected the launch of the Volcano Bond in mid-March 2022. The upcoming issuance is a significant development for El Salvador, as it not only showcases a pioneering approach to sovereign finance but also underscores the nation’s commitment to integrating Bitcoin into its economic framework.
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