El Salvador Eyes Bitcoin Bond Issuance, Mulls BTC Loans for SMEs

 

El Salvador is planning to issue Bitcoin bonds in March and is considering BTC loans for small businesses.

El Salvador could release its much-anticipated bitcoin (BTC) bond offerings as early as next month, as well as new bitcoin loan offerings for SMEs and micro-industries. Mónica Taher, the chief of Technological and Economic International Affairs at the National Trade and Investments Secretariat, revealed the latest bond development to President Nayib Bukele. Taher made the following announcement on Twitter:

"The first [bond] issue is scheduled to be released between March 15 and March 20. They'll be [issued] via the [Bitcoin] Lightning Network, which allows anyone who wants to invest $100 to do so without having to engage a broker.

Tahir clarified in a later statement that the USD 100 in question refers to the bond's initial value.

The semi-official mouthpiece of the Bukele administration, Diario El Salvador, also reported that the country's finance minister, Alejandro Zelaya, said:

"The benefit of bitcoin bonds is they accept cryptocurrencies and bitcoin as payment." This gives you access to the stock market. Leveraging all of those cash flows and collecting such a large sum of money increases the likelihood of a sale."

The "offer" would be more valuable since "access" would be "democratized," Zelaya continued.

Bukele and his government are optimistic that the issuance, which will be used to fund the creation of a tax-haven city for foreign crypto enthusiasts, will raise $1 billion. However, some social media commentators believe that some governments may try to prevent citizens from accessing the bonds — albeit such a restriction may be difficult to enforce if BTC payments are accepted via the Lightning Network.

I believe that US people will be unable to purchase the product during its original release, but that it will be quite easy for them to purchase it in the "secondary market." — 9 February 2022, John Smith (@arbitrage789)

Meanwhile, according to ElSalvador.com, Taher said the government was working on "offering low-interest bitcoin loans to tiny and micro-enterprises."

"Small bitcoin loans" will provide the unbanked "access to digital money and help them create a credit history," according to Taher. El Salvador's economy would be "strengthened by strengthening small enterprises," she said.

Officials further stated that such a lending system, which would focus on "micro and small firms," would be compatible with the Chivo BTC wallet and app, which is controlled by the government.