El Salvador’s “Volcano Bonds” to Launch in January

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  • El Salvador’s Bitcoin bonds, dubbed “Volcano Bonds,” have gained regulatory approval
  • The bonds will launch in January 2024 with 6.5% interest
  • The bonds will debut on the Bitfinex Securities Platform, aiming to pay down debt and fund the “Bitcoin City” project.

El Salvador’s eagerly awaited Bitcoin bonds, known as “Volcano Bonds,” have reportedly secured regulatory approval and are slated for launch in early 2024. Named after the country’s iconic volcanic landscapes, the Volcano Bond yesterday received the green light from El Salvador’s Digital Assets Commission, with an expected debut in the first quarter of 2024. The concept of issuing Volcano Bonds emerged in November 2021, two months after Bitcoin became legal tender in the country.

6.5% Return

News of the approval for the Volcano Bond came from The National Bitcoin Office (ONBTC) yesterday, with President Nayib Bukele referencing it with an X post: 

Designed to tackle sovereign debt and finance the development of the ambitious “Bitcoin City,” the Volcano Bond is set to make its debut on the Bitfinex Securities Platform, a registered El Salvadoran trading site for blockchain-based equities and bonds. The bonds, with a tenure of 10 years, promise an annual return of 6.5% to holders.

A bond is essentially a debt security where the issuer borrows funds from investors for a defined period, with the promise of periodic interest payments. Upon maturity, the issuer repays the principal amount to the bondholders. The 6.5% annual return on El Salvador’s Volcano Bonds represents the interest paid to bondholders for the privilege of using their funds over the specified timeframe.

This innovative financial instrument, tethered to Bitcoin, showcases El Salvador’s commitment to exploring novel avenues in the evolving landscape of digital finance. The country is also experimenting with mining bitcoin using geothermal gas from its famous volcanos and in October launched the “Lava Pool” mining pool for the purpose.