The El Salvador’s Finance Minister Alejandro Zelaya announced the postponement an unprecedented and unique issue of a Bitcoin-backed bond which was planned for launch last week in El Salvador.
Touted as “Volcano Bonds”, the El Salvador’s government had made repeated announcements to launch these bonds by March 2022. The government has decided to put a hold on the current plans and wait for favorable conditions in the digital financial market.
El Salvador is the first and only in the world to adopt bitcoin as legal tender, so far. The legislative assembly, El Salvador adopted Bitcoin in 2021.
The President of El Salvador Nayib Bukele promoted Bitcoin to improve the economy of the country. He also hoped that it will boost foreign investments in El Salvador.
The adoption of Bitcoin as legal tender in El Salvador invited criticism from the international community and the citizens of El Salvador on grounds of electricity consumption involved and volatile nature of the Crypto coin.
The financial market all over the world is struggling to surviving the challenge posed by the Russia-Ukraine war. A similar launch of $1 billion bond was scheduled by the Central American government in mid March but the volatility of the cryptocurrency amidst war forced authorities to postpone the date.
The kind of volatility which Bitcoin has witnessed in past six months is too much for the investors to digest. Bitcoin was trading at a record high of $67,500 in early November 2021 but now it is trading around $42,000. Keeping this in mind, the launch of bond could be delayed till September.
