El Salvador has announced plans to issue a bitcoin-backed bond. The Salvadoran government says the bond issue will be suspended due to the Russia-Ukraine crisis.

El Salvador's President. Nayib Bukele said that the country will issue the bond to finance "Bitcoin City". In addition, the bitcoin bond will support additional bitcoin purchases.

El Salvador's $1B Bitcoin Bond

The Russia-Ukraine crisis has dealt a major blow to the financial sector, including the cryptocurrency market. The price of Bitcoin and other cryptocurrencies has plummeted since the beginning of the year.

This negative market performance has affected the schedule for bitcoin bonds in El Salvador. The country's Finance Minister Alejandro Zelaya noted that the bitcoin bond would be launched within days, but the ongoing war in Ukraine affected this.

"We think March 15-20 is the right time. Our tools are almost complete. But the international context will tell us …… I did not expect a war in Ukraine," noted Celaya.

The government of El Salvador has announced the issuance of 20 bitcoin bond notes. Dubbed EBB1, the bitcoin bonds will allow the Salvadoran government to issue $1 billion worth of bitcoin-backed bonds. Half of the funds raised from the bond will be used to purchase bitcoin, with the rest going to investments in energy and mining infrastructure.

El Salvador's Bitcoin Initiative

The government of El Salvador has been focusing on plans to invest in bitcoin. The country plans to create a bitcoin city that will focus on innovative businesses around the bitcoin and cryptocurrency industry. The city will be powered entirely by the Conchagua volcano, Buclay noted.

El Salvador adopted bitcoin as legal tender in September of last year. The country holds a large amount of bitcoin, with the most recent purchase occurring on Jan. 24, when it was priced at around $49,100.

El Salvador's approval of bitcoin as legal tender has raised concerns among global regulators, including the International Monetary Fund (IMF) and the World Bank. However, despite the skepticism, the government has stuck to its plan.

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