El Salvador Pioneers Tokenization of Real World Assets: $6.25 Million Raise to Build a Hotel

El Salvador is pioneering the integration of blockchain technology into traditional sectors by launching a tokenized debt issue. This initiative will fund the construction of a new hotel at El Salvador International Airport.

The facility will span 4,484 square meters, featuring 80 rooms, five commercial spaces, and various amenities, including a pool, restaurants, a gym, gardens, and multipurpose rooms.

El Salvador Hotel Project Will Require a Minimum Investment of $1000

Bitfinex Securities, the first regulated entity under El Salvador’s Digital Asset Securities Law, leads this venture. They plan to finance the hotel project through tokens issued by a developer – Inversiones Laguardia S.A. de C.V. (HILSV), aiming to raise $6.25 million.

These tokens offer a 10% coupon over five years, with a minimum investment of $1,000. Additionally, investors can receive free hotel accommodations based on the size of their investment.

The HILSV tokens would trade against US dollars and Tether’s USDT on the Liquid Network, a Bitcoin sidechain. Paolo Ardoino, CTO of Bitfinex Securities, emphasized the project’s importance.

Read more: What is The Impact of Real World Asset (RWA) Tokenization?

“For the first time, investors who do not usually have the opportunity to invest in such assets have the opportunity to do so, while issuers in markets which have less access to capital, are able to tap into a new asset class to raise finance,” Ardoino said.

This development has the potential to catalyze El Salvador’s capital market and introduce a major new asset class to the market. According to Jesse Knutson, Head of Operations at Bitfinex Securities, this project showcases the transformative power of Bitcoin-based capital markets.

It also contributes to El Salvador’s economic growth by creating significant employment opportunities.

The implementation of this project is expected to generate approximately 1,000 jobs during its construction phase. Moreover, it could create up to 5,000 jobs in its operational phase. The capital raise is scheduled to begin on May 13, 2024, and will last for one month.

Simultaneously, the tokenization of real-world assets is gaining momentum worldwide. Circle’s recent introduction of a smart contract for the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) exemplifies this trend.

Now, investors in BUIDL can seamlessly exchange their tokenized real-world assets for USDC. This functionality, facilitated by Circle’s new smart contract, minimizes transaction costs and enhances liquidity, illustrating the vast potential of blockchain technology. Jeremy Allaire, CEO of Circle, expressed his enthusiasm for the new developments.

“Tokenization of real-world assets is a rapidly emerging product category,” Allaire said.