El Salvador’s Bitcoin Bond Shelved Due to Security Concerns: Tether CTO

Bitcoin bonds were first expected to go on sale in the first quarter of 2022 when it was first revealed last November.

El Salvador, a Central American country that recognized Bitcoin (BTC) as legal tender in September last year, has again delayed the issuance of its $1 billion Bitcoin bond. The first announcement of Bitcoin bonds, often called Volcanic bond or Volcanic token, was made in November 2021 as a mechanism to issue tokenized bonds and raise $1 billion in return from investors. The money raised will then go towards creating Bitcoin City and buying additional BTC.

The bonds were originally supposed to be released in the first quarter of 2022, but due to weak market conditions and global crises, the date was moved to September. Bitcoin bonds will now launch by the end of the year, according to Bitfinex and Tether CTO Paolo Ardoino, who made the announcement earlier this week.

Security concern

In an exclusive interview with Cointelegraph, Arduino revealed that the current delay in the launch could be due to internal security concerns as the country’s security forces have been forced to deal with an epidemic of gang violence. Because of this, government resources were diverted and “the delay in the launch of the Volcano Token should be seen in this context,” according to the report.

The primary infrastructure partner of the government of El Salvador, Bitfinex, is responsible for processing the transactions resulting from the sale of Volcanic tokens. But before the government grants Bitfinex a license to issue securities, the Digital Securities Bill, which is scheduled to be passed in September, must first be approved.

The final draft of the bill is ready, Ardoino said, and given that President Nayib Bukele’s party has a majority, they expect it to be passed in the coming weeks. If the nation is stable enough to pass such legislation, he said, “We are confident that the legislation will receive approval from Congress in the coming weeks.”

Following the passage of this legislation into law, Bitfinex Securities El Salvador, SA de CV “will apply for a license to operate under El Salvador’s digital securities regulatory framework,” he continued.

Although a number of articles and industry analysts have blamed the current downturn in the cryptocurrency market and the declining interest of investors on these factors, Ardoino is confident that investors would be interested in the concept of Bitcoin bonds regardless of the state of the market.

Bitcoin bonds, he continued, could accelerate BTC adoption. “When you consider that the memecoin, Dogecoin, managed to reach a market cap of $48 billion, there is definitely enough investor interest in the digital token economy to support a $1 billion volcano,” he said, using memecoins as an example.

On September 7, 2021, El Salvador declared BTC legal tender and subsequently accumulated approximately 2,301 BTC worth approximately $103.9 million. Profits from the investment were even used to fund the construction of hospitals and schools during the bull market, but now that the market is in a bear market, the value of BTC holdings is only approximately $45 million.

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