On Saturday, El Salvador’s President Nayib Bukele announced plans to build the world’s first “Bitcoin City.” The city will have residential and commercial areas, restaurants, entertainment venues, and an airport, and will be funded initially by bitcoin-backed bonds.
“Speaking at an event to mark the close of a week to promote bitcoin in El Salvador, Bukele said the city planned in the east of the country would get its energy supply from a volcano and would not levy any taxes except for value added tax (VAT),” reported Fox Business.
“We’ll start funding in 2022, the bonds will be available in 2022,” Bukele said.
“Invest here and make all the money you want,” Bukele told the crowd. “This is a fully ecological city that works and is energized by a volcano.”
Samson Mow, chief strategy officer of blockchain technology provider Blockstream, joined Bukele, and said that the country would issue a $1 billion bitcoin-backed bond which would spearhead funding for the building plans.
Back in June, El Salvador made history as the country’s legislature passed a law making Bitcoin legal tender in the Central American nation.
“The designation allows bitcoin, the world’s largest cryptocurrency by market value, to be used to pay taxes. Businesses would also be obligated to accept bitcoin for payment, though those without the ability to process those payments would be exempt, according to the bill. Converting bitcoin into other currencies will no longer be subject to capital-gains tax,” The Wall Street Journal explained at the time. “To allow the automatic convertibility of bitcoin to U.S. dollars, El Salvador’s government said it would set up a trust at the Development Bank of El Salvador. The Latin American country, one of the region’s poorest, has struggled over the years to manage its finances and has used the U.S. dollar as its official currency since 2001.”
According to El Salvador’s government, the use of the cryptocurrency could fuel “financial inclusion,” with the bill noting that “70% of its population doesn’t have access to traditional financial services.”
The Bitcoin Law was supported by a “supermajority” in El Salvador’s Congress, with the bill receiving 62 votes out of an available 84. President Nayib Bukele described the move as “History!”
“The [Bitcoin Law] has been approved by a supermajority in the Salvadoran Congress,” tweeted Bukele. “62 out of 84 votes!”
“The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out,” the law reads, as reported by CNBC, with the cryptocurrency’s exchange rate with the U.S. dollar — El Salvador’s official currency — being “freely established by the market.”
“Necessary training and mechanisms so that the population can access bitcoin transactions” would also be provided by the government.
Despite falling from its record high of $68,990.90 in recent days, Bitcoin is still up more than 90% this year alone.