El Salvador became the first country to officially adopt Bitcoin as legal tender in 2021. Now it is taking the next step in its digital revolution and is scrapping all taxes on technological innovations. Along with this decision, the country is also setting up its National Bitcoin Office (ONBTC), also known as “the Bitcoin office”.
Technology as a solution
El Salvador is a country that has been plagued for years by high inflation and a heavy dependence on the US dollar. By partially switching to Bitcoin, President Nayib Bukele hopes to finally change the economic position of his country.
As a next step in this strategy, Bukele sent a new law to Congress on April 1, which removes all taxes on technological innovations. Income tax, property tax and profit tax will no longer be applicable in El Salvador.
Extra support for this initiative comes through the so-called Bitcoin office in El Salvador. A kind of legislative body that works with Bitcoin entrepreneurs and. businesses. According to the Asociación Bitcoin de El Salvador, the office aims to turn El Salvador into a global technological and economic force.
In addition to a financial comeback for the country, President Nayib Bukele aims to boost tourism in the country, fight terrorism and build local business hubs in this way.
At the beginning of 2023, legislation was finally approved that makes it possible to issue the long-awaited volcano bonds. The idea of these bonds is to raise money from the financial market to invest in Bitcoin City and buy Bitcoin.
The investors in the bonds receive an interest rate and half of the profit that El Salvador manages to realize on Bitcoin. In theory, these could be very interesting bonds.
The term volcano bonds comes from the idea of then running Bitcoin City on renewable energy generated from the heat of El Salvador’s volcanoes. Furthermore, the plan is to mine Bitcoin with that energy and thus convert the energy directly into money.