By the end of the lock-in period of the Bitcoin Bonds, the (Annual Percentage Yield) APY will be around 146%.
El Salvador, the country where Bitcoin is a legal tender, plans to build a ‘Bitcoin City’ using Bitcoin Bonds.
It will be a metropolis with both residential and commercial dwellings.
President Nayib Bukele announced the plan on Sunday, during the Bitcoin Week conference in El Salvador.
Moreover, the country is going to launch USD denominated Bitcoin Bonds worth $1 billion, which will be developed by Blockstream, on the Liquid Network. These Bonds will be used to build the Bitcoin City.
From the Bonds, $500 million will be used to develop bitcoin mining infrastructure which will generate energy from a volcano. The rest $500 million will be used for buying more bitcoins. The Bonds will be launched in 2022.
El Salvador is also looking to bring legislation on the securities law so that crypto ‘Liquid security tokens’ can be listed on a regulated exchange in the country, Blockstream stated in a blog post. Bitfinex is in line to get the license to process the Bond Issuance.
Samson Mow, Blockstream’s Chief Strategy Officer, explained that the Bonds will be 10 years long and rake in a return of 6.5% per year for the first 5 years. In the last 5 years, the returns will be significantly higher.
By the end of the 10-year period, the Annual Percentage Yield will be 146%. They are promising such high returns as they have projected that Bitcoin will hit the $1 million mark in 5 years.
President Bukele promised that there would be no property tax, payroll tax, capital gains tax, income tax, municipal tax, and carbon emissions in the Bitcoin city. The city municipality will earn revenue through Value Added Tax (VAT).
Upon this occasion, Samson hailed El Salvador as the Singapore of America. He also disclosed that more such bonds will be launched in El Salvador in future.
El Salvador is becoming the laboratory of crypto adoption. The country has come a long way from the Bitcoin Beach in El Zonte. Globally, regulators are keeping a close eye on the developments in the South American nation and taking notes for their own policies.
Will crypto adoption at such a scale take place in every country? Only time will tell.
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