El Salvador Launching Bitcoin “Volcano Bond” In Risky Crypto Move
The country’s president, Nayib Bukele, has stated the country may launch a massive “volcano bond” worth $1 billion in order to try to avoid a rescue by the IMF.
El Salvador has announced that it may sell debt backed by Bitcoin for the first time ever this week to avoid perpetuating the IMF financial influence on the country. This volcano-bond would be worth $1 billion and would in part ($500 million) be used to finance the creation of “Bitcoin City”, the project where digital coins are mined using geothermal energy in order to make the process more sustainable.
The move comes about as millennial president Nayib Bukele announced the country would start diversifying its finances away from the US Dollar and other institutions like the IMF, whose aid has often come with strings attached. The fund has rebuked the country’s adoption of Bitcoin as legal tender in September 2021, stating it posed “considerable risks to the country’s financial stability and consumer protection.”
Will Bukele’s move be a success? He is ultimately relying on interest in the Bitcoin-backed bond by his citizens and foreign retail investors. Many crypto proponents argue that decentralized finance could help third world countries to detach themselves from their dependence on the developed world. Ultimately, however, with institutional investors appearing reluctant to participate and the price of Bitcoin in decline, the move may turn out unsuccessful