Roubini, a self-described crypto-anarchist, has said the country’s government has been “bankrupting” the country by failing to enact strict controls on cryptocurrency mining, leaving the country vulnerable to a bubble-burst.
Moody’s downgraded El Salvador’s sovereign credit rating earlier this month because of concerns that the country’s audacious Bitcoin bet to prevent it from securing a much-needed $1.3 billion loan from the International Monetary Fund (IMF) may fail.
The fiscal profile of El Salvador would only get worse if the government increased its exposure to Bitcoins, according to Moody’s analyst.
The risk of the issuer defaulting on a loan, which is also known as a credit event, is also a factor in determining the credit rating.
El Salvador has issued $800 million in dollar-denominated bonds that are due in January 2023. Debt problems and uncertainty surrounding Bitcoin have led to the bonds’ yields rising to 34% earlier this month. In 2021, they showed the worst performance in the entire world.
The world’s most distressed sovereign debt has been plagued by the most distressed sovereign debt around the globe. Now, it plans to issue Bitcoin-denominated “volcano bonds” in partnership with blockchain developer Blockstream and iFinex, the parent company of Tether and Bitfinex. Part of the raised funds will be used for constructing a libertarian mecca called “Bitcoin City.
The “coolest dictator” lost over $20 million by purchasing Bitcoin with the country’s treasury funds.
The “CEO of El Salvador” has been buying Bitcoin despite pushback from some in the cryptocurrency community.
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