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El Salvador Plans to Build Tax-Free Bitcoin City

Bloomberg reported that El Salvador is exploring bitcoin further and intends to issue sovereign bitcoin bonds.

According to the report, the country will issue $1 billion worth of tokenized U.S. dollar denominated 10-year bonds that pay 6.5% through Liquid Network.

The funds will be converted into bitcoin for half of the amount. According to the report, half of the funds will go towards infrastructure and bitcoin mining.

According to the report, after a five year lockup, the government will sell its bitcoins and pay additional dividends to investors.

Blockstream, a software development company, stated that at the end the 10th anniversary of the bond, the annual percentage yield will be 146% due to the anticipated bitcoin appreciation.

Blockstream Chief Strategy Officer Samson Mow stated that the lockup period will remove $500 million worth of bitcoin from the market for five year, which will increase the tokens’ scarcity as well as value.

According to the report, El Salvador will also build “Bitcoin City”, which will be exempt from income, property, and capital gains taxes. For the construction of the city, and other services, the only tax will be a 10% value added tax. Conchagua volcano will be the site of the city. It is hoped that the volcano will be used to generate energy for mining.

According to Mow, El Salvador wants to be the financial center of the globe. He said that he believes other countries will start to notice. According to Mow, countries that replicate El Salvador’s efforts will enjoy a massive advantage’ while those who don’t will feel ‘bitcoin FOMO’, or the fear of missing out,

User complaints in El Salvador were increasing last month. Users fell prey to scammers and lost a lot of money. Other failures include incompatibility of other wallets, and other technical issues.