May 20, 2022
Nayib Bukele, president of El Salvador and proponent of his country's adoption of Bitcoin

El Salvador has postponed the much anticipated issue of a bitcoin-backed bond planned for last week, with the government deciding to wait for market conditions to improve, Finance Minister Alejandro Zelaya said on Tuesday.

The Central American government had originally planned to issue $1bn in bonds to investors between March 15th and March 20th, converting half into Bitcoin and using the remaining half for infrastructure and Bitcoin mining. Under the plan investors would keep the bond for at least five years and receive dividends as El Salvador liquidates the BTC.

But market volatility along with the Russian invasion of Ukraine has prompted authorities to postpone the launch of the scheme. BTC has fallen from a high of $67,500 in November and has been hovering just above $40,000 for over a month now, whilst Vladimir Putin’s invasion of his neighbor has introduced additional instability to the markets.

And finance minister Zelaya confirmed that these concerns made bad timing for the issuance of the bond, noting that the first half of the year would be the best time for such a move.

“Now is not the time to issue the bond,” said Zelaya, speaking on “Frente a Frente”, a popular show on Salvadoran TV. “In May or June the market variants are a little different. At the latest in September. After September, if you go out to the international market, it is difficult”.

El Salvador became the first country in the world to adopt bitcoin as legal tender last year, gaining praise from crypto enthusiasts but also generating concerns in political and regulatory circles. The IMF has raised concerns on more than one occasion of the effect the move could have on the global economy, and in the US a piece of legislation called the Accountability for Cryptocurrency in El Salvador Act has been proposed to tackle the potential repercussions of its southern neighbor’s embracing of the digital currency.