El Salvador Bitcoin Bonds Set to Launch Amidst Ukraine Conflict, Doubts

El Salvador Finance Minister Alejandro Zelaya recently announced the launch of Central America’s Bitcoin bond could happen between March 15 to March 20. However, the ongoing conflict in Ukraine and apprehension from institutional investors may pose issues for the launch.

Zelaya told a local TV channel that preparations are “almost” done and noted the correct timing for the launch.

We believe that between March 15 and 20 is the right timing. We have the tools almost finished,” he told the channel. This is in line with President Nayib Bukele’s long-time vision of building a “Bitcoin City” through issuing El Salvador’s first $1 billion Bitcoin-supported bond and using gains to purchase more crypto assets. The city is planned to be powered by geothermal energy from a nearby volcano to “mine” digital coins.

Zelaya clarified, however, that the launch is still counting on the “international context,” pertaining to the ongoing conflict between Russia and Ukraine that the finance minister “didn’t expect.” The Bitcoin bond has faced resistance as volatility intensifies, with the geopolitical crisis adding to the FUD.

Moreover, pessimism among institutional investors adds to the list of the project’s worries. Several of these investors would not participate despite closely monitoring the bond with interest, noting that buyers were presumably retail crypto investors.

Bukele’s gamble on crypto has yet to present a payoff, with just 2% of remittances being sent from digital wallets last January. El Salvador’s sovereign bonds have declined and the country is struggling to pay off its debts. Earlier this year, the International Monetary Fund prompted Bukele to drop Bitcoin’s legal tender status.

Despite analysts believing that the bond will have limited benefits to the Central American nation and will be delayed, history dictates that the relevant legislation may be approved swiftly.