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El Salvador to issue $1B in Bitcoin (BTC) bonds on the Liquid Network

Sun 21 Nov 2021 ▪ 12h41 ▪ 4 min read — by Mary Anderson

The Republic of El Salvador will issue bonds worth $1 billion (~£740 million) on the Liquid Network. Half of the sum will be spent on the purchase of Bitcoin (BTC), the other half will be directed on the development of energy and Bitcoin mining infrastructure in the region.

The path to becoming the Singapore of digital capital markets

El Salvador is also going to create a government securities law and issue a license to Bitfinex Securities to process and list the bond issuance. This will give way to other Liquid security tokens, such as the Blockstream Mining Note (BMN) or Exordium (EXO), to be listed on a regulated El Salvadorian securities exchange.

As reported in the press release, the architect of the Bitcoin Bond is the CSO of Blockstream Samson Mow. The initiative uses the Liquid Network as the basis for the tokenised bonds, as well as the Blockstream Asset Management Platform (AMP) for annual payouts.

“We believe in a Bitcoin future. The future of financial products belongs on Bitcoin. This is a historic milestone and only the beginning of our search to achieve global inclusivity for finance – the same way that Bitcoin has created global inclusivity for money,” said Samson Mow. “This is the new dawn of digital capital markets.”

Blockstream is a world leader in Bitcoin and blockchain infrastructure. Blockstream’s sidechain (Liquid Network) technology makes it possible to speed up Bitcoin settlements and enables financial institutions to tokenise assets. Blockstream Mining provides enterprise-class mining facilities for hosting Bitcoin mining operations. The Blockstream company was founded in 2014, with offices and teams all over the world.

Liquid Network is a sidechain-based settlement network for traders and exchanges, providing faster and more confidential transactions with bitcoin and the issuance of digital assets.

Details

The Salvadoran Bitcoin bond will be issued for a total amount of $1 billion (~£740 million) at a 10-year duration and a 6.5% coupon.

“We are excited to work with Blockstream and build the foundation of the financial infrastructure for the future on the Liquid Network. This is a powerful first step for El Salvador in becoming a global hub for digital capital markets,” said President of El Salvador Nayib Bukele.

After the initial $500 million (~£370 million) is monetised, half of the additional profit will be shared with investors in the form of Bitcoin Dividends. Once a year, Bitcoin dividends will be distributed using the Blockstream Asset Management Platform (AMP) to track bondholders.

The developers of the initiative say that it has a lot of advantages for investors, including low volatility and less risk due to the regulatory framework. Yet, for now, international financial organisations are still frowning upon El Salvador’s decisions.

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Mary Anderson avatar
Mary Anderson

I am sure that crypto assets are a new type of economy. We are at the origins of the crypto revolution. Right now, it is worth studying what cryptocurrencies and the blockchain are in order to make the most of this knowledge and these skills in the future.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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