El Salvador's President Nayib Bukele has announced plans to issue the world's first government bitcoin bonds and build Bitcoin City, a city free of income, property and capital gains taxes.
El Salvador is set to issue tokenized 10-year bonds at 6.5%, denominated in US dollars, through the Liquid Network. Half of the funds from the so-called "volcano bonds" will be converted into bitcoins, and the second will go to the organization of infrastructure for mining using geothermal energy. After the five-year blocking period, the government will start selling bitcoins and paying additional dividends to investors.
At the end of the tenth year after the launch of the project, the annual bond yield will be 146% due to the projected growth of bitcoin - according to the company's forecasts, within 5 years the cryptocurrency may rise in price to $ 1 million. Mr. Moe clarified that the blocking period is designed to withdraw from the bitcoin market by $ 500 million, which will increase the value of bonds.
At the beginning of the month, bitcoin set another record , having risen in price to $ 68,000, but since then it has noticeably lost in value. In such cases, the President of El Salvador always recommends that investors buy cryptocurrency. As of the end of October, the country owned at least 1,100 tokens. Mr. Moe is confident that this project will transform El Salvador into a "Latin American Singapore". Investors participating in the project will receive permanent residence in the country, and will also be able to apply for citizenship under the accelerated program.
Bitcoin City will be built next to the Konchagua volcano, which will provide energy for the mining infrastructure, and will begin issuing bonds in 2022. The only tax in the new city will be the 10% VAT required to finance its construction and maintenance.
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