Crypto Market Conditions Force El Salvador To Postpone BTC Bond Launch
El Salvador has announced a 6-month postponement of its widely anticipated $1B BTC bond launch. This move has disappointed the majority of those expecting the launch to happen this month. An official statement from the country’s finance ministry states that “the current conditions in the crypto market don’t favor this bond’s launch.”
Why The Postponement?
During an interview with a local TV station, Alejandro Zelaya (Ukraine’s finance minister) explained that “the Russia-Ukraine war which has been harming global financial markets forced the government to postpone this launch.”
He further said, “while market variants will be different from the present over the next three months, September seems like a better time for the launch. Although, the market conditions will also be a huge determinant on whether the launch will take place at that time.” Zelaya was the first government official to indicate a possible postponement after the previously proposed date of march 15-20 for the launch.
How El Salvador Plans To Utilize The Funds From The BTC Bond
Last November, El Salvador announced plans to launch a BTC bond. Part of the funds will be used to develop what was termed a “BTC city” around the Colchagua volcano. The plan is for the city to be a hub of commercial activities with services in the entertainment sector and other sectors.
The Colchagua volcano would serve as the power source for BTC mining operations. Part of the announcement states that 50% of the $1b funds from the bond will be converted to BTC, while the remaining 50% will be used for infrastructural development and fund BTC mining operations. El Salvador has partnered with Blockstream (a crypto tech firm) to provide tech support for this BTC city launch through its liquid protocol technology.
Many players in the crypto sector have developed a keen interest in this BTC bond. An ex-president of the nation’s apex bank, Carlos Acevedo, opined that “many consequences are resting on this bond issuance. If it fails, many people will be completely disinterested in a similar feature in the future.” Acevedo’s opinions might be valid after all following the result of a survey recently performed by El Salvador’s Central American university.
Differing Opinions From Salvadorans
The survey indicated that 71% of Salvadorans believed that the BTC bond launch would only be beneficial to the elite class (top entrepreneurs and foreigners). This category of people also revealed that they don’t believe that the legalization of a BTC tender in the country hadn’t delivered on the promise that the government had made them believe when it announced the law.
Three months after president Bukele proposed the BTC law to the legislature, El Salvador eventually passed the proposal to become law last September. The president had promised that the BTC law would positively impact the country’s dwindling economy, such as increased foreign investment, less dependence on the USD, and a decrease in remittance fees. El Salvador’s BTC move has attracted criticisms from several financial regulators globally, including the IMF.
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