El Salvador to Issue "Bitcoin Bond," a $1B Tokenized Bond Issuance on the Liquid Network
This Bitcoin Bond offering sets El Salvador on the path to become the Singapore of digital capital markets
SAN SALVADOR, El Salvador, Nov. 20, 2021 /PRNewswire-PRWeb/ -- Blockstream is proud to announce that the Republic of El Salvador will issue $1 billion USD in bonds on the Liquid Network. The $1 billion USD will be split between a $500M allocation in bitcoin (BTC) and a $500M spend for building out energy and Bitcoin mining infrastructure in the region.
El Salvador also aims to create a government securities law and grant a license to Bitfinex Securities to process and list the bond issuance. This could pave the way for other Liquid security tokens like the Blockstream Mining Note (BMN) or Exordium (EXO) token to be listed on a regulated El Salvadorian securities exchange.
The architect of the Bitcoin Bond is Blockstream CSO Samson Mow and designed with Blockstream VP of Financial Products Jesse Knutson, in collaboration with the government of El Salvador. The initiative leverages the Liquid Network as a stable foundation for the tokenized bonds, and Blockstream's Asset Management Platform (AMP) for annual payouts of coupons to investors.
Benefits of Tokenized Sovereign Debt for Investors
● Low volatility, low friction
● Citizenship through investing
● Less risk through regulatory framework
● Exposure to bitcoin price appreciation
The demand for liquid assets with low volatility and low friction is strong and growing. Tokenized sovereign debt should be seen as an attractive third option for investors looking to allocate money or to take profit into.
"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, Chief Strategy Officer at Blockstream. "This is the new dawn of digital capital markets."
The El Salvadoran Bitcoin Bond is for a total issuance of $1B US at a 10-year duration and a 6.5% coupon - roughly half the weighted coupon of El Salvador's long-duration sovereign debt.
"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 Nayib Bukele. "Our long-term commitment is to explore and develop a domestic platform to help facilitate the growth of our digital asset industry."
The use of funds is split into a $500M Bitcoin purchase and a $500M infrastructure spend. Once the original $500M had been monetized, half the additional gains will be shared with investors as the Bitcoin Dividend. On an annual basis, Bitcoin Dividends are dispersed using Blockstream's Asset Management Platform (AMP) to keep track of bond holders. As the first sovereign nation to accept bitcoin as legal tender, Blockstream is excited about the potential this collaboration with the government of El Salvador offers.
About Blockstream
Blockstream is the global leader in Bitcoin and blockchain infrastructure. Blockstream's sidechain technology (Liquid Network) enables faster Bitcoin settlements while empowering financial institutions to tokenize assets. Blockstream Mining provides enterprise-class mining facilities for the colocation of Bitcoin mining operations. The Cryptocurrency Data Feed, developed in partnership with Intercontinental Exchange, delivers best-in-class real-time and historical exchange data. Blockstream Green is the world's most advanced consumer Bitcoin wallet. Blockstream was founded in 2014, with offices and team members distributed around the world.
About the Liquid Network
The Liquid Network is a sidechain-based settlement network for traders and exchanges, enabling faster, more confidential Bitcoin transactions and the issuance of digital assets. The network is operated and managed by its federated members, ensuring the system has nosingle point of failure. Learn how to get access to the future of digital asset finance at liquid.net.
Media Contact
Fernando Nikolic, Blockstream, +1 (236) 987-8977, [email protected]
SOURCE Blockstream
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