El Zonte’s digital debt and the municipal bond tokenization pilot

An anonymous donor gave over $100,000 in Bitcoin to the village of El Zonte in 2019 to start a local circular economy. This project in El Zonte, which began after a major Bitcoin donation in 2019, provided financial tools to a coastal community where 80 percent of the population previously lacked access to traditional banking infrastructure. Mike Peterson and Jorge Valenzuela led the movement. The organizers paid local teenagers in Bitcoin for tasks such as cleaning trash from rivers or working as lifeguards. Most residents used the digital currency to pay electricity bills or receive remittances from family members. These transfers avoid the 10 percent or more fees charged by traditional money wiring services. The village holds 1,829 residents, many of whom live on the edge of subsistence. In 2021, El Salvador became the first country to adopt Bitcoin as legal tender, though the Legislative Assembly changed the status of Bitcoin in 2025 to make private usage voluntary. Remittances in 2024 accounted for 24 percent of El Salvador’s GDP. Local business owners like Roxana Valles use Bitcoin for inventory, and some travelers use the technology to send money home to their families. The project aimed to improve the lives of the poorest and most isolated villages in El Salvador. Before the project, most villagers traveled to the city to handle financial matters because the area lacked bank branches. The community works to help local business owners capture gains from increased tourism.

El Zonte’s digital debt

The Republic of El Salvador will issue a $1 billion Bitcoin Bond on the Liquid Network. This bond carries a 10-year duration and a 6.5% coupon. The government will split the proceeds: $500 million for Bitcoin purchases and $500 million for building energy and mining infrastructure. The architect of the bond includes Samson Mow and Jesse Knutson, who collaborate with the government of El Salvador. Once the initial $500 million reaches its five year mark, the government will share half of the additional gains with investors through the Blockstream Asset Management Platform. You should note that this 6.5% coupon sits much lower than the 13% yield on other 10 year El Salvadoran sovereign debt. The government intends to use the Bitcoin to decrease the available supply of the asset. This issuance also helps the country manage public debt, which reached 95.4 percent of GDP in 2020. The government seeks to create a government securities law and grant a license to Bitfinex Securities to process the bond issuance. The government aims to build a global hub for digital capital markets. The bond attracts investors who want liquid assets with low friction. The issuance relies on the Liquid Network to provide a stable, digital foundation. This expansion grows the digital asset industry.

Municipal tokenization pilot

The DTCC processed tokenized asset trades on July 15, 2026. More than 30 firms participated in these transactions using the Besu and Canton networks. Participants included BlackRock, Goldman Sachs, and J.P. Morgan. This event follows the successful conversion of assets held at the Depository Trust Company into tokens. The DTCC Tokenization Service launches in October 2026. While the municipal bond market stayed largely unchanged for years, this pilot shows how blockchain can automate coupon payments and reduce settlement times. The list of participants also includes companies like BNP Paribas Securities Corporation, Charles Schwab, and Vanguard. The DTCC utilizes a combination of private and public blockchain networks to diversify its capabilities. The New Hampshire Business Finance Authority also plans to issue $100 million in bitcoin-backed bonds by leveraging a $150 million trust. The BFA will use the New Hampshire Statutory Trust to manage the transaction. This process is similar to a previous deal in Quincy, Massachusetts, where J.P. Morgan used a private blockchain to issue $10 million of tax-exempt bonds. The authority to operate a tokenization service for real-world assets came after the DTCC received a No-Action Letter from the U.S. Securities and Exchange Commission. The DTCC works with the Canton Network to facilitate the tokenization of securities. These digital conversions allow participants to access new liquidity pools and execute digital asset strategies. Will the municipal market finally embrace these digital tools?