The president of El Salvador, Nayib Bukele, presented on Tuesday the first images of Bitcoin City, the project of a tax haven for cryptocurrencies and blockchain technology that he announced in November 2021. The president has shared through Twitter illustrations and photographs of scale models that anticipate how the metropolis, which will be built on the coast of the Central American country, near the Conchagua volcano, would look like. However, he has not clarified when or how construction will begin, which was allegedly going to be financed with the sale of sovereign Bonds in Bitcoin for the value of 1 billion dollars that his government has not yet been able to position in the market.
The Salvadoran president has clarified that unlike the golden scale model of the photographs, the real version of Bitcoin City will be full of green areas. He has also pointed out that it will have monuments, a viewpoint from the volcano, commercial and residential areas and an airport. Bukele stated last year that most conventional taxes will not apply in this territory.
Bukele also assured in his networks that the government of El Salvador bought 500 Bitcoins this Monday, in its largest purchase to date of the cryptocurrency. In the context of the collapse of the Bitcoin price below US$31,000 for the first time since July 2021, Salvadorans bought the crypto assets at an average price of US$30,74 according to the president.
The Caribbean country, however, does not appear to be in optimal conditions to assume this expense. El Salvador’s sovereign debt prices collapsed in April, plunging by 15.1% to historic lows.
Besides, only 20% of Salvadorans who downloaded the Chivo app, which the government designed to facilitate daily cryptocurrency transactions, continued to use it after spending the US$30 the authorities were giving away to promote its use.
In this context, the IMF again urged the Salvadoran government to backtrack on its adoption of the crypto asset as legal tender, warning in February that, mainly due to its high volatility, this implies significant risks for the financial stability of the Central American country.