This weekend, it was reported by Bloomberg, that El Salvador is preparing to launch a $1 billion bond – half of the funds will be used to invest in municipal infrastructure buildout and volcanic-powered mining without the need of income tax, sales tax revenue, or capital gains excise fees. The remaining half will be used for buying additional Bitcoin. Here’s the initial announcement that was retweeted by El Slavador’s President, Nayib Bukele.

It’s reported that El Salvador will issue the $1 billion in funds as tokenized U.S.-dollar denominated 10-year bonds. Through the Liquid Network, the municipal paper will pay 6.5 per cent.

El Salvador had its first vote in Bitcoin earlier this year. The market capitalization of the top cryptocurrency reached an all time high at $69 000 per coin just a few weeks back, but has dropped approximately 20% since Nov. 10.

Bukele is a consistent buyer of more Bitcoins since the country adopted it as its method for payment. El Salvador currently has approximately 1100 bitcoin.

Flipside

• This marks the world’s first issuance of a Bitcoin-based municipal bond. It will be interesting to see how the International Monetary Fund and World Bank respond to this news as both organizations vocally opposed El Salvador’s adoption of Bitcoin as legal tender.

What are the reasons to care?

• This development could spark similar funding rounds in other countries and cities.

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