Bitcoin Volcano Bonds Archives

It was about time that Binance ’s CEO, Changpeng Zhao, visited El Salvador. His company is the biggest cryptocurrency exchange in the world and El Salvador is the first country to adopt bitcoin as legal tender, why did this take so long? According to the Secretariat of Communications of the Presidency of the Republic of El Salvador, Binance’s CEO is visiting the country “along with other entrepreneurs, who are interested in knowing the investment possibilities.”

Hoy llegó a El Salvador el CEO y fundador de @BinanceES, Changpeng Zhao (@cz_binance), junto a otros empresarios, quienes están interesados en conocer las posibilidades de inversión, en el primer país del mundo que adoptó el #Bitcoin como moneda de curso legal. pic.twitter.com/XBYVwyZ8Dd

— Secretaría de Comunicaciones (@ComunicacionSV) March 23, 2022

What will Changpeng Zhao meet President Bukele about? Reuters caused quite the commotion when they tried to guess.

Related Reading | Binance’s CZ Wants Entrepreneurs To Create Coins. Does His Argument Make Sense?

What Did Reuters Say About Binance ’s CEO Visit To El Salvador?

As far as Reuters is concerned, CZ is visiting El Salvador to assist them with the issuance of the volcano bonds. They literally said:

“El Salvador is seeking support from cryptocurrency exchange Binance for its implementation of bitcoin as legal tender and the issuance of bitcoin bonds, the Central American country’s ambassador to the United States said on Wednesday.”

Is that what he’s here about, though? In the closest source we found, EFE quotes Mayorga telling “local media,” “We need businessmen his stature to support the issue of subscription to the volcano bonds.” In the ambassador’s Twitter account, Milena Mayorga welcomes Changpeng Zhao, CEO of Binance, “with the largest cryptocurrency wallet in the world.” Don’t ask.

Hemos dado la bienvenida a Changpeng Zhao @cz_binance, CEO de @binance, con la wallet de criptodivisas más grande del mundo.#LibertadEconómica #Bitcoin pic.twitter.com/PBExfF2Lwc

— Milena Mayorga (@MilenaMayorga) March 23, 2022

According to Reuters, “Mayorga said Zhao’s visit was a vote of confidence in Bukele’s decision to adopt bitcoin as legal tender last September, as well as its plan to issue bitcoin-backed bonds.” According to her own tweets, they discussed, “strategic projects such as Bitcoin City, Surf City among others, was what we shared with the delegation of investors from Binance and companies.”

Proyectos estratégicos como #BitcoinCity, #SurfCity entre otros, fue lo que compartimos a la delegación de inversionistas de @binance y empresas que nos acompañan en esta 13 misión de negocios. pic.twitter.com/l6TOJNklAm

— Milena Mayorga (@MilenaMayorga) March 24, 2022

Who’s That Dark Figure Behind Binance ’s CEO?

The visit of one of the great businessmen of our time is most likely a positive for El Salvador. However, who’s that behind him? Could it be…? A pseudonymous Twitter user provides the necessary blown up pictures:

pic.twitter.com/1B38pZkyjW

— mutatrum (@mutatrum) March 23, 2022

That’s right, notorious lurker Brock Pierce. Of course, he is one of the “other entrepreneurs.” If you squint, you can also see him in one of Milena Mayorga’s pictures. Let’s remember what our sister site Bitcoinist reported the first time that the EOS creator lied his way into the Presidential Palace:

“Something is rotten in the state of El Salvador. The first nation to declare BTC as legal tender received no other than the infamous Brock Pierce. An “Official Delegation of Bitcoin Ambassadors” reportedly met with President Bukele and other government officials. However, is there such thing as an “official delegation” of a decentralized protocol? No, there isn’t. And the whole Bitcoin community is up in arms about the situation.”

And just like that, Brock Pierce is back in San Salvador. Who would’ve thought?

BNB price chart on BinanceUS | Source: BNB/USD on TradingView.com
President Bukele Responds To The Rumors

In a since-deleted tweet, Bitcoin Magazine echoed Reuters’ take on the nature of Binance CEO’s visit to El Salvador. President Bukele asked them to “please don’t spread Reuters FUD. The Bitcoin Volcano Bonds will be issued with Bitfinex. The short delay in the issuance is only because we are prioritizing internal pension reform and we have to send that to congress before.”

I’m meeting with @cz_binance tomorrow to discuss OTHER issues, not the Volcano Bonds

Unless he wants to buy some, of course #Bitcoin fixes FUD!

— Nayib Bukele (@nayibbukele) March 23, 2022

To that, President Bukele added “I’m meeting with Changpeng Zhao tomorrow to discuss OTHER issues, not the Volcano Bonds. Unless he wants to buy some, of course.” And Binance CEO responded, “Looking forward to it. Plenty to discuss.” And, to be fair, Reuters also said that “Zhao praised El Salvador for taking on a pioneering role in the adoption of bitcoin and said Bukele’s presidency would be remembered in “heroic” terms for its bold bet on the future.”

Related Reading | Binance’s CZ Explains Why Banning Crypto Ads Won’t Affect Demand

Is Binance CEO’s visit to El Salvador priced in? Will the BTC price move because of it? What about BNB? Will Binance make moves in El Salvador? Does the market care about this historic visit? The next few days will answer all of those questions.

Featured Image: Changpeng Zhao in El Salvador, screenshot from this video | Charts by TradingView

Will the plan work? Soon, the Bitcoin Bonds will get the legal foundation they need. In a recent TV interview Alejandro Zelaya, El Salvador’s Finance Minister, said they will send the necessary bills to Congress. Soon. Reportedly, El Salvador will initially issue $1B worth of bonds, which will have a ten-year maturity and carry a 6.5% coupon. The bitcoin that backs them will be locked for five years.

The project, announced by President Bukele at Labitconf 2021, includes plans to build Bitcoin City. More on that later. In a scheme worthy of MicroStrategy, El Salvador will spend half of the money on the construction of Bitcoin City and will buy Bitcoin with the other half. Will the plan work? Well, they have to sell the bonds first. And for those to exist, a regulatory framework is required.

BTC price chart for 01/06/2021 on OkCoin | Source: BTC/USD on TradingView.com
What Did El Salvador’s Finance Minister Say About The Bitcoin Bonds?

In an interview in the local TV show “Frente a Frente,” Zelaya announced the plan’s following steps. Reuters reports:

“El Salvador’s government will send to Congress about twenty bills covering financial markets and investment in securities to provide a legal foundation for issuing bitcoin bonds, Finance Minister Alejandro Zelaya said on Tuesday.”

The Finance Minister didn’t specify exactly when they will introduce the bills. According to El Salvador In English, Zelaya said, “This type of legislation is what we are going to send to the Legislative Assembly to be able to give legal scaffolding and legal certainty to all those who buy the Bitcoin bond.”

"El Salvador podría convertirse en un centro regional donde los demás países puedan emitir deuda, contamos con grandes ventajas como tener una economía dolarizada y ser de punta de lanza en materia cripto", expresa el Ministro @AlejandroZelay9 en @Frentea_Frente. pic.twitter.com/uHbEzx4A3c

— Ministerio de Hacienda (@HaciendaSV) January 4, 2022

Through the Ministry of Finance’s Twitter, they quote Zelaya being even more daring. “El Salvador could become a regional center where other countries can issue debt, we have great advantages such as having a dollarized economy and being pioneers regarding crypto.”

It’s to cover and guarantee the #Bitcoin #VolcanoBonds, but also a full re-engineering of the economy and of the way a nation state does business.

Everybody searching for freedom: this is the place to come https://t.co/zupEKC3usB

— Nayib Bukele (@nayibbukele) January 5, 2022

Adding fuel to the fire, President Bukele said via Twitter, “It’s to cover and guarantee the Bitcoin Volcano Bonds, but also a full re-engineering of the economy and of the way a nation state does business.” Not satisfied with that bomb, he added, “Everybody searching for freedom: this is the place to come.”

What About Bitcoin City? Is That A Go?

The Bitcoin Bonds will finance the construction of Bitcoin City, but, what’s that exactly? When President Bukele announced El Salvador’s plans, NewsBTC timely reported:

“According to Bukele, Bitcoin City will be a full-fledged metropolis with residential and commercial areas. It would also have shopping centers, restaurants, a port, an airport, and railway services. There would be no income, property, capital gains, or payroll taxes. Residents would, however, be subject to just value-added tax (VAT). This tax will go towards paying for the municipality’s bonds, public infrastructure, and city maintenance.”

However, more recently, an investigative report by podcaster Anita Posch cast doubt upon the Bitcoin Bonds and the whole enterprise:

“Apparently, the seemingly advanced plan for Bitcoin City was a collage. “At least some of the Bitcoin City presentation slides were downloaded from the internet and there was no detailed plan behind the announcement.” Not only that, the structure behind the Bitcoin bonds that will finance the whole operation was also improvised. “The way the Bitcoin bonds will work was finally decided only a few minutes before Samson Mow took the stage.”

However, the plan is a go, and Blockstream’s Samson Mow is all-in on it. He recently tweeted the trailer for an upcoming documentary on El Salvador and its Bitcoin City plans. In the tweet, he threw an extremely optimistic, “Bitcoin is going to save the world and it starts here in El Salvador.”

Here's an amazing trailer from @anna_tutova for a new documentary on everything that's happening in El Salvador and #BitcoinCity. #Bitcoin is going to save the world and it starts here in El Salvador. @nayibbukele @WilliamSorianoH @fulloa51 @maxkeiser pic.twitter.com/GcBUV8d9RN

— Samson Mow (@Excellion) December 29, 2021

Will the plan work? Is Bitcoin City a real project or a hastily put together mess? Do the Bitcoin Bonds offer a high enough return? Or are the Bitcoin Bonds too risky? Wouldn’t it be better for an investor to just buy bitcoin with that money? Or are we missing something?

To answer all those questions and more, El Salvador needs a regulatory framework to issue the Bitcoin Bonds. And the roughly twenty bills that guarantee that are on their way to Congress.

Featured Image by Wilson Edilberto Santana Suarez on Unsplash | Charts by TradingView