On January 5th, El Salvador's Finance Minister announced that the government would submit approximately 20 bills related to financial markets and securities investments to Congress, advancing the issuance of Bitcoin bonds. These bills aim to provide legal structure and certainty for Bitcoin bond purchasers. President Nayib Bukele later confirmed this on Twitter, drawing global attention and proving that the country’s plan to build "Bitcoin City" is more than just hype—it's systematically progressing.
What impact will El Salvador’s Bitcoin bond issuance have? Will the world’s first Bitcoin City succeed? And which other countries hold Bitcoin?
El Salvador’s Bitcoin Ambitions
Purchasing and holding Bitcoin, adopting it as legal tender, issuing Bitcoin bonds to fund a Bitcoin City—El Salvador has undeniably become the most Bitcoin-embracing nation globally. President Nayib Bukele is now a fervent Bitcoin advocate.
On September 7, 2021, Bitcoin officially became legal tender in El Salvador, circulating alongside the US dollar. This made El Salvador the first country to adopt Bitcoin as official currency. The government hopes this move will enhance financial inclusion, boost economic growth, and improve fiscal conditions. With no sovereign currency and heavy reliance on dollar settlements, about two-thirds of Salvadorans lack bank accounts. Remittances account for roughly 24% of GDP annually, among the highest rates globally, primarily from transactions with the US. Traditional remittance services charge exorbitant fees, costing the nation significantly. President Bukele estimates Bitcoin could save El Salvador $400 million annually in transaction costs.
Beyond this, on November 21, 2021, Bukele unveiled plans to build the world’s first "Bitcoin City," funded largely through Bitcoin bonds. Specifically, El Salvador aims to issue $1 billion in 10-year dollar-denominated bonds at a 6.5% coupon rate. Pre-commitments from investors have already secured $300 million for the Bitcoin-backed bond (EBB1), achieving 30% of the target. Half the raised funds ($500 million) will develop energy and mining infrastructure for Bitcoin City, while the remainder will purchase and treasury Bitcoin.
El Salvador’s Bitcoin ambitions also include aggressive accumulation. Before legalizing Bitcoin, the government acquired 400 BTC, indicating long-term planning. Since September 2021, it has made multiple bulk purchases, now holding 1,391 BTC—the fourth-largest national holder.
What does this mean for markets? Forbes Central America noted that by March 2022, Central America’s $120 billion annual debt market could emerge as a reality, with El Salvador, Panama, or the Dominican Republic poised to host a financial hub. Could El Salvador become the "Wall Street of Central America"?
While Bitcoin’s legalization has positive market implications, recent Federal Reserve rate hike expectations have muted reactions. Whether these measures resolve El Salvador’s financial woes remains uncertain. Domestic challenges persist: polls show majority opposition to Bitcoin adoption, with protests citing volatility risks. Technical issues like Chivo wallet thefts (ranging from $20 to $1,000 losses) further complicate adoption.
👉 Discover how Bitcoin bonds could reshape global finance
Which Other Countries Hold Bitcoin?
Beyond El Salvador, nations like Bulgaria, Ukraine, Finland, and Georgia hold Bitcoin. Per buybitcoinworldwide, five countries collectively own 263,308 BTC (1.25% of total supply).
Bulgaria leads with 213,519 BTC—seized in 2017 from a crime network evading customs fees. Valued at $500,000 then, these assets now exceed $9 billion.
Ukraine ranks second with 46,351 BTC, primarily declared by officials. For instance:
- Dnipro deputy Vyacheslav Mishalov holds 18,000 BTC.
- Foreign Affairs’ Peter Lensky owns 6,528 BTC.
- Odessa Council’s Alexander Urbansky has 5,328 BTC.
Despite lacking legal recognition, officials’ heavy investments hint at future regulatory support.
Finland holds 1,981 BTC (third place), confiscated in drug raids. In 2021, it sought brokers to sell these assets (then worth $79 million), delayed earlier over crime-recirculation fears.
Georgia reports 66 BTC held by officials, tracked via asset declarations. One legislator, George Vashadze, owns 57 BTC.
As crypto adoption grows, expect more nations to explore Bitcoin’s potential.
FAQ
Q: Why did El Salvador adopt Bitcoin?
A: To reduce remittance costs, boost financial inclusion, and attract investment via innovative fiscal policies.
Q: How secure is Bitcoin as legal tender?
A: High volatility poses risks, but infrastructure like Chivo wallet aims to stabilize usage despite technical hurdles.
Q: Which country holds the most Bitcoin?
A: Bulgaria, with 213,519 BTC seized from criminal operations.
Q: Could other nations follow El Salvador’s lead?
A: Yes, especially those with high remittance reliance or seeking fintech innovation.