President Naib-Bukley of El Salvador announced at an event last weekend that El Salvador intends to issue the world’s first Bitcoin sovereign bond and build a “Bitcoin City” that will be exempt from income tax, property tax and capital gains taxi.
Buckley said that this "Bitcoin City" will be built near the Conchagua Volcano to provide energy for mining. He added that Bitcoin bonds will be issued in 2022. He said that the only tax in Bitcoin City will be a 10% value-added tax, which will fund the city's construction and services.
According to Samson Mow, Blockstream's chief strategy officer, who attended the event with Buckley, El Salvador plans to issue a $1 billion tokenized 10-year U.S. dollar bond through Liquid Network with a yield of 6.5%. He said that half of the so-called "volcano bond" (volcano bond) funds will be used to buy bitcoin, and the other half will be used for infrastructure and bitcoin mining powered by geothermal energy.
Mow said that after a five-year lock-up period, the Salvadoran government will begin selling its bitcoins and paying investors additional dividends.
Mow said that Blockstream's model shows that due to the expected appreciation of Bitcoin, the bond will have an annual yield of 146% at the end of the tenth year, and predicts that Bitcoin will reach the $1 million mark within five years. He said that the lock-up period of the bond is designed to allow 500 million US dollars of Bitcoin to withdraw from the market within 5 years, increasing its scarcity and value.
Mow said these plans will make El Salvador a "world financial center" and "Latin America's Singapore," and expects other countries to follow suit.
It is reported that investors in the project will also obtain permanent residency in El Salvador and quickly obtain citizenship.
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