El Salvador intends to issue the world's first sovereign Bitcoin bonds and build Bitcoin City, which will be free of income, property and capital gains taxes, President Nayib Bukele announced in the beach town of Mizata to a crowd of cheering Bitcoin enthusiasts.
El Salvador plans to issue US$1 billion in tokenized US-dollar denominated 10-year bonds to pay 6.5 percent via the Liquid Network, according to Samson Mow, chief strategy officer of Blockstream.
Half of the funds of the so-called "volcano bond" will be converted to bitcoin and the other half will be used for infrastructure and bitcoin mining powered by geothermal energy, Mow said, while sharing the stage with Bukele.
After a five-year lock-up period, the government will begin to sell its bitcoins and pay an additional dividend to investors, Mow said.
The first countries that do this will have a massive advantage. This is the beginning of nation state bitcoin FOMO.”
—— Mow said, referring to the term "fear of missing out".
Investors will also be awarded permanent residence and be fast-tracked to citizenship, Mow said while standing next to Bukele.
Bitcoin City will be built near the Conchagua volcano which will provide energy for mining, Bukele said, adding that bitcoin bond issuance will begin in 2022.
The only tax in Bitcoin City will be a 10 percent value-added tax to fund city construction and services, he said.
However, former Democratic presidential candidate Hillary Clinton has a skeptical view of bitcoin, saying there are worries that it could undermine the dollar.
What looks like a very interesting and somewhat exotic effort to literally mine new coins in order to trade with them has the potential for undermining currencies, for undermining the role of the dollar as the reserve currency, for destabilizing nations, perhaps starting with small ones but going much larger.”
—— Hillary said.
Mooers, what do you think of the 'Bitcoin City' and tokenized Bitcoin bonds?