El Salvador has revealed plans to build a city dedicated to the leading cryptocurrency to drive the crypto’s adoption. According to Nayib Bukele, the country’s president, the city will be known as Bitcoin City. To fund its development, El Salvador will issue Bitcoin bonds worth one billion USD.
Bukele first announced the plans during the Bitcoin Week summit to court more Salvadorans to join the BTC train.
The city will offer “technological education” and be powered by “geothermal energy.” People will also be able to move around the city using sustainable transport options.
According to Bukele, Bitcoin City will follow El Salvador’s footsteps and use BTC as legal tender. Bitcoin City inhabitants will enjoy benefits such as zero percent income tax, capital gains tax, property tax, payroll tax, and municipal taxes.
The El Salvadoran president also holds that there will be zero percent carbon dioxide emission from the city. However, the city’s development will be conducted in partnership with leading virtual currency companies.
Some crypto-focused companies working with El Salvador to actualize Bitcoin City include Bitfinex and Blockstream.
We “Are Making History Together”
Bitfinex’s chief technology officer, Paolo Ardoino, noted that the cryptocurrency exchange will build a storage platform for the BTC bonds. In a tweet, the CTO added that apart from securing El Salvador’s BTC bonds, the platform will “soon” become a preferred place for “many local and foreign digital assets offerings developing new digital asset regulation for the country!” He also noted that the three “are making history together.”
Bukele sees Bitcoin City as a conventional city with everything from a port, residential spaces, shopping areas, among other amenities. However, “everything” will revolve around the leading cryptocurrency.
Despite most of the taxes being scrapped, Bitcoin City inhabitants will pay VAT or value-added tax. VAT will fund the city’s maintenance needs, among other costs.
Samson Mao, Blockstream’s CSO, observed that El Salvador will easily attract “a $1 billion bond” since Bitfinex has “a lot of whales.”
According to the CSO, $500 million of the BTC bonds will be locked up for five years. As such, it’ll help make Bitcoin more scarce by removing the invested amount from the total circulation.
From Bitcoin Trust to Bitcoin Schools, to Bitcoin City
Since El Salvador adopted BTC as legal tender in September, it announced initiatives to draw more Salvadorans into Bitcoin. For example, earlier this month, the country’s president disclosed that the extra amount in the El Salvador Bitcoin Trust will go into establishing “Bitcoin Schools.”
At the time, Bukele’s spokesperson also noted that profits from the country’s BTC purchases will benefit Salvadorans. It was reported that the Bitcoin education centers will provide virtual currency education for Salvadorans.
Last month, Bukele revealed that his government used four million USD from the BTC Trust’s profits to build a veterinary hospital. Apart from crypto-focused initiatives, El Salvador has also been filling up its Bitcoin bags.
As El Salvador moves to build Bitcoin City, Indian banks have sent warning emails to cryptocurrency investors. Banks that have sent such notifications include Axis Bank and HDFC Bank.
According to available information, the Indian financial institutions sent the emails to their customers who double as crypto investors.
The banks are concerned that uneducated investors may be driven by the ongoing cryptocurrency marketing efforts and put funds into virtual currencies without adequate knowledge of crypto price volatility.
Indian Banks Can’t Prevent Depositors from Investing in Crypto
According to the banks, crypto ads are promising high returns on investments. For example, Axis Bank’s MD, Amitabh Chaudhry, observed that one such ad indicated “that the returns are four times that of fixed-deposit rates.”
Chaudhry also noted that while it’s possible to “put all sorts of algorithms to trace customers” putting money into virtual currencies to warn them against the risks, banks “can’t do much because it’s depositors’ money.”
Speaking to The Economic Times, the financial institutions said that the country’s central bank, the Reserve Bank of India (RBI), has advised them “to be very careful” when opening up to virtual currency trading.
However, some in the crypto community have indicated that the country’s banking ecosystem houses risks just as crypto. The community took the opportunity to bring up the Yes Bank collapse last year. At the time, the bank was the third-largest in the country.
Currently, Indian crypto supporters are engaging the government in talks hoping to develop a favorable crypto regulatory framework.