Two Weeks To Invest in El Salvador Hotel Tokens: Yay or Nay?

Bitfinex Securities is facilitating a tokenized debt issuance for the construction of a new Hampton by Hilton hotel at El Salvador International Airport. The project aims to raise $6.25 million by selling 6,250 HILSV tokens worth $1,000 each The token issuer, Inverlag, is a construction contractor turned property developer from the Philippines, who is also planning to manage the hotel operations after the build.

Bitfinex Securities - Bridging Kazakhstan and El Salvador, True to Bitcoin

Bitfinex Securities, a tokenization arm of Bitfinex Exchange, is part of the group that owns Tether, the USDT stablecoin issuer. Established in 2021, the platform offers solutions to raise capital through tokenized company shares and have them publicly admitted to trading.

This is Bitfinex's third tokenization project. Alongside the El Salvador Hotel tokens, the platform offers two listings for Astana International Financial Centre of Kazakhstan, where it obtained its first regulatory license. Those include the Blockstream Mining Note, which offers investors exposure to Bitcoin mining, and Alternative, a securitization fund established in Luxembourg that invests in small and mid-sized companies in growing-economy countries such as Tajikistan, Kazakhstan, Moldova, Armenia, and others.

Bitfinex Securities obtained a license in El Salvador in January this year and is the candidate front-runner to list the country's long-promised Volcano Bonds. As El Salvador passed the digital securities legislation, which paved the way for the bonds, the issuance was anticipated in the first quarter of 2024. Bonds aim to raise $1 billion and would be backed by the proceeds from the geothermal Bitcoin mining operation powered by the nation’s active volcanoes. This month, the Astana Financial Services Authority and the National Digital Assets Commission of El Salvador signed a Memorandum of Understanding to strengthen cooperation and promote information exchange within the digital assets markets across their jurisdictions.

Bitfinex is cooperating with El Salvador authorities in its Bitcoin investment venture too. Even though the officially announced custodian of the country's Bitcoin holdings is the Mexican crypto exchange, Bitso, blockchain data shows that El Salvador's Bitcoin holdings have been routed through Bitfinex.

Bitcoin maximalists will also like the platform Bitfinex chose for the tokenization project. The HILSV tokens will be issued on the Liquid Network, a Bitcoin sidechain designed for transacting digital assets.

Inverlag Hotels - Per Aspera Ad Astra

Tokenization has long promised the internationalization of capital and access to finance for promising projects in emerging markets. But can the El Salvador Airport hotel project become the first successful case for this technology?

The company implementing the project is Inverlag, a property developer based in the Philippines with a portfolio of projects in the country and Japan. According to the company's website, it grew from providing construction subcontracting services to developing property projects such as W City Center in Bonifacio Global City in Manila.

According to the founder, Roberto Laguardia, who is of El Salvadorian descent, the El Salvador government invited them to implement this project back in 2017. The land plot lease agreement for 9 hectares was secured with CEPA, a State agency in charge of developing the infrastructure of ports, airports, and railways in El Salvador.

By 2017, Inverlag had formalized the construction plans and secured the Hampton brand franchise from Hilton. According to the Laguardia, the construction began at the end of 2019, however, the works were suspended due to uncertainties caused by the COVID-19 outbreak.

In April this year, Inverlag received registration as a digital asset issuer in El Salvador, refreshed the project website, and taped into the digital asset community to fund the construction:

“The project entails the construction of a 4,484 m2 facility spread across five levels. The infrastructure will include 80 rooms, five commercial spaces each measuring 99 square meters, a swimming pool, and various amenities such as restaurants, a gym, gardens, multipurpose rooms, among others.”

The founder promised to complete the construction and open the hotel in one year. The company plans to manage the hotel operations after construction, which might add a significant burden of preopening tasks for the company delivering to these tight construction timelines.

With a minimum investment of $1,000, the investment opportunity offers a 10% annual yield over five years. The token holders above certain thresholds also get free nights at the hotel. Combined with the participation of Bitfinex Securities the tokens should have been selling like hotcakes.

Still, at the time of writing, the Bitfinex Securities website showed that only $342,000 had been raised so far. The platform states that the token sale will end in 14 days.

The HILSV issuance is the first Bitfinex Securities project executed under the country’s new digital assets legal framework and can be a catalyst for much-anticipated Volcano Bonds issuance and perhaps others. Moreover, this case is pioneering tokenization with Bitcoin blockchain technology in a developing nation, with the participation of small and medium enterprises probably struggling with access to institutional investors - all the promises this industry has been maintaining so far.