San Salvador — The construction of Bitcoin City, one of the flagship projects of President Nayib Bukele’s cryptocurrency drive, will attract investors to reside and settle in El Salvador, according to Samson Mow, CEO of crypto technology company JAN3, former chief strategy officer at Blockstream, and a leading Bitcoin (XBT) advisor to the Salvadoran government.
JAN3, whose mission statement is to “accelerate hyperbitcoinization” according to Mow’s LinkedIn profile, has signed a memorandum of understanding to help build El Salvador’s digital infrastructure, Mow said in an interview with Blockware Intelligence Podcast.
Among the first projects JAN3 wants to tackle is the immigration platform for Bitcoin City, which must be user friendly, accessible and secure.
“You’re going to have bitcoiners trying to immigrate or apply for citizenship, and they’re going to be uploading documents and all that, it’s very important that it’s a very secure system and platform,” Mow said.
That project would be given momentum if El Salvador presents the reforms for immigration and citizenship facilitation in the package of some 52 laws that Bukele promised in February, and which are aimed at stimulating foreign investment, he added.
There is already interest from crypto investors to set up shop in the country, due to the already promulgated Bitcoin Law and the promise of facilitating immigration into the country, Katie Ananina, founder of Plan B Passports, told Bloomberg.
The firm has advised around 400 people on moving to El Salvador in the past year.
Its clients, she said, view the circulation of Bitcoin as legal tender in the Central American country favorably, and are also comfortable with the flexible protocols to combat Covid-19.
In addition, capital gains, including those earned from trading crypto assets, are not taxed in the country.
“They are trying to compete for the right audience,” Ananina said.
Building Bitcoin City will take a decade
In his chat with Blockware Intelligence Podcast, Mow estimated that Bitcoin City could take around 10 years to build.
“I don’t know if there’s a specific timeline, but building the whole city is probably going to take a decade or thereabouts,” he estimated.
“Building a city is not a trivial matter, especially with the vision of what they want, which is a big city with its own airport,” Mow said.
The Canadian entrepreneur, who has taken on the task of driving Bitcoin adoption in nations around the world, said he likes to think of Bitcoin City primarily as a special economic zone, rather than a model full of buildings.
“Bitcoin City is easier to contextualize as a special economic region first than as a place with buildings, because that will come later.”
“You can go there, set up a company, and you’ll get tax benefits and incentives to, you know, domicile your business,” he said.
A tough market for Bitcoin bonds
The crypto acolyte confirmed that he participated in the structuring of El Salvador’s Bitcoin bond, an instrument that proposes to issue $1 billion and pay a 6.5% coupon. Half of the funds would go to the Bitcoin City project in Conchagua, and the other half to a strategic reserve of Bitcoins.
El Salvador’s Finance Minister Alejandro Zelaya had said he expected the bond placement to take place in March of this year, but was delayed due to multiple factors, according to Mow, such as the Russia-Ukraine war, inflation, the announcement of a pension reform, and the government’s focus on repressing gang violence
“Now they are focusing on the economy again, so hopefully [the bond] will be issued soon,” Mow said.
The aforementioned package of 52 laws to attract investment also includes a digital securities law, which would empower the state to issue Bitcoin bonds.
“I know there are discussions around the law,” Mow said. Approval by the legislature would mean progress on the issue, but even if that is achieved, it is best to view the current environment with caution, he said.
“The timing could be difficult now because there has only been implosion after implosion in the crypto space.”
Despite this, he believes Bitcoin prices have bottomed out at around $20,000, and he is confident that the cryptocurrency will decouple from traditional markets, which will still remain challenged by the complicated global landscape.
Translated from the Spanish by Adam Critchley