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El Salvador announces the launch of a $1 billion BTC bond! Aimed at creating a "Bitcoin City," offering various incentives to attract foreign investment

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El Salvador announces the launch of a $1 billion BTC bond! Aimed at creating a "Bitcoin City," offering various incentives to attract foreign investment

The first country in the world to adopt Bitcoin as legal tender, El Salvador, has recently launched several new initiatives. Apart from using Bitcoin profits to build public infrastructure and starting "geothermal mining," the country introduced new projects last week. These projects include issuing $1 billion in Bitcoin bonds and creating a "Bitcoin City" centered around Bitcoin!

$1 Billion Bitcoin Bond

Last week, blockchain technology company Blockstream announced on Twitter a partnership with El Salvador to issue a $1 billion Bitcoin bond on the Bitcoin sidechain Liquid Network developed by Blockstream. Half of the bond proceeds will be used for future Bitcoin purchases, while the other half will be allocated to energy infrastructure and Bitcoin mining facilities expenses.

According to a press release, the Bitcoin bond is a 10-year bond with a coupon rate of 6.5% and is set to be issued in 2022. Annual interest payments to investors will be made using Blockstream's asset management platform AMP. Additionally, Blockstream mentioned that when the initially raised $500 million is converted into cryptocurrencies, half of the additional profits will be distributed as Bitcoin dividends to investors.

"We are excited to work with Blockstream and lay the foundation for the future financial infrastructure on Liquid Network. This is the powerful first step for El Salvador to become a pivotal hub in the global digital capital market." said President of El Salvador, Nayib Bukele.

Collaboration with Bitfinex on Regulation

In addition to Blockstream, cryptocurrency exchange Bitfinex is also a partner in El Salvador's bond program. El Salvador is currently drafting a securities law, and Bitfinex will provide expertise in cryptocurrency regulations to assist the government of El Salvador in formulating and implementing appropriate and fair cryptocurrency regulations.

With the issuance of a new regulatory framework in El Salvador, Bitfinex's parent company iFinex will be granted the license to handle bond issuances, allowing the Salvadoran government to issue and launch their Bitcoin bonds on Bitfinex.

Building "Bitcoin City"

On the day of announcing the Bitcoin bond issuance, President Nayib Bukele of El Salvador unveiled plans for "Bitcoin City" at the Bitcoin Week event held in the country, with the initial funding for this construction project coming from the funds raised through the Bitcoin bond.

Bitcoin City is planned to be located in the eastern part of El Salvador, between the cities of La Uniรณn and Conchagua. It will include an airport, residential and commercial areas, with a large Bitcoin symbol in the city center.

Nayib Bukele aims to attract significant foreign investment through this city, stating that there will be no income tax, capital gains tax, property tax, payroll tax, or municipal tax. The city will rely entirely on geothermal energy from volcanoes to achieve zero carbon emissions. Residents will only be required to pay a 10% value-added tax, with half going towards repaying the Bitcoin bond fund and the other half for public services funding.