In the beach town of Mizata, President Nayib Bukele announced to a crowd of cheering Bitcoin lovers that El Salvador plans to issue the world’s first sovereign Bitcoin bonds and create Bitcoin City, which will be free on property, income and capital gain taxes.

While sharing the stage with the President, the chief strategy officer of Blockstream Samson Mow said that El Salvador intends to issue $1 billion in tokenized US-dollar denominated 10-years bond to pay 6.5% through the Liquid Network. He added that half of the funds of the so-called ‘volcano bond’ will be used for Bitcoin mining powered by geothermal energy and infrastructure and the other half will be transformed to Bitcoin.

He continued that the government will start to sell its Bitcoin and pay an extra dividend to investors after a 5 years lockup period. This period on the bond is curated to take $500 million in Bitcoin out of the market for 5 years, adding to their value and scarcity. Mow also announced that investors will also be bestowed permanent residence and be fast-tracked to citizenship.

Bukele said that Bitcoin City will be created near the Conchagua volcano which will offer energy for mining. He also added that Bitcoin bond issuance will begin in the year 2022. The only tax in Bitcoin City will be a 10% VAT to fund city services and construction.