- El Salvador President Nayib Bukele’s bullish crypto outlook continues as the wheels were set in motion for a Bitcoin City during Bitcoin week in the country’s capital. The El Salvador government holds a minimum of 1100 bitcoins, buying recent dips.
The President of El Salvador, Nayib Bukele, remains bullish about crypto, announcing the construction of an income and property tax-free “Bitcoin City.” The city’s construction will be funded by government bitcoin bonds issued through Blockstream’s Liquid Network and, later, value-added tax.
The president plans to launch the 10-year bonds in early 2022. Bondholders who do not have citizenship will have the issuance of citizenship expedited. The bonds would be locked up for five years, increasing the scarcity of bitcoin and driving the price up. The bonds issued will be worth $1B, and a 6.5% coupon will be given to bondholders. $500M will be used to buy bitcoins, thereafter additional dividends would be paid to investors, following the sale of the bitcoins after five years. El Salvador will license Bitfinex as the book runner for the bond. A book runner is a coordinating entity in the issuance of the bond.
$500M will be used to develop infrastructure to energize bitcoin using geothermal sources in La Union in eastern El Salvador. The city will have a plaza that will appear as a bitcoin symbol when viewed aerially. When bitcoin was made legal tender, it had supporters and detractors, and technical glitches abounded on day one. The state now owns a minimum of 1100, buying into the recent dip, as it had in Sep 2021. Merchants were initially skeptical of accepting the cryptocurrency for goods and services, with only 7% set up to receive bitcoin as of early October this year. McDonald’s and Starbucks were among the first merchants in El Salvador to accept bitcoin.