Prosper, libertarian city. Is bitcoin (BTC) in the tropics already over?

Prospera, a town on the island of Roatan off the coast of Honduras, a bitcoiners dream. A tailor-made, hybrid city, dedicated to bitcoin (BTC): very special agreements with Honduras promised a bright future. The opportunity to become an e-citizen was possible and provided many foreign investors. Yes, but here it is: the change of government in 2021 calls everything into question and maybe it’s not so bad after all…

Bitcoin legal tender at Prospera

A controversial law passed by the Honduran government in 2013 allowed companies to create special economic zones: ZEDE. Three in number, they may have their own laws, regulations, courts, police forces, schools and hospitals. The founders of will prosper seized the opportunity to set up a low-tax, fully privatized and efficient city on financial, technological and medical innovation. will prosper was to transfer part of the registered taxes (12%) to Honduras and ensure prosperity for its inhabitants. The agreement with Honduras was to guarantee self-governance for 50 years.

Prospera Honduras bitcoin

Taxation and e-citizenship

In Próspera, taxes are reduced: a personal income tax of 5%, a tax on the sale of goods and services of 2.5%, a corporate income tax of 1% and a tax on land value by 1%. That’s all. No other tax (not even capital gains tax) is levied.

What Próspera offers is not just a favorable tax environment for bitcoins (BTC), but also regulatory certainty that allows people to build with bitcoins without worrying about whether a regulator will ever step in and change all the rules “, explains Joel Bomgar, the president of Prospera, a company registered in Delaware (USA) …

The ZEDEs

ZEDEs were strongly promoted as a way to foster economic development by Castro’s predecessor, former President Juan Orlando Hernandez. But what were the underlying motivations of this corrupt president, who was finally extradited to the United States in April to face drug trafficking charges? In a country riddled with poverty and violence, Prospera’s project may seem exciting at first sight.

Honduras crayfish rock
Children from Crawfish Rock. Photo credit: Restofworld.org

All is not so rosy in the Kingdom of Prospera

will prosper presented international investors with a libertarian seaside paradise, paltry taxes and crypto-friendly regulations. Among Próspera investors demonstrating heavyweights in the Silicon Valleysuch as Pierre Thiel (Paypal) or Marc Andreessen (through Pronomos Capital, a venture capital fund that invests in autonomous city projects). After successfully winning a multimillion-dollar fundraising appeal, work began on the island in 2020.

Quite quickly, the ideal of American libertarians is confronted with reality: a conflict begins with the neighboring village of Crayfish Rock home to a historic Garifuna community. Rest of the world reported that in the summer of 2019, the community of Crawfish Rock lost access to running water. The founder of will prosper offered water pending necessary repairs. But the villagers will have finally received bills! And these should be paid to the Foundation of Prospera (non-profit), weird, weird… And then the tensions only exacerbated between the parties, the local population fearing being expropriated: a video viral shows founder Erick Brimen being escorted by manu militari police during a speech.

Relief for the local community: the end of the ZEDEs

On April 21, 2022, the newly elected Honduran congress unanimously voted to end the ZEDEs. The president Xiomara Castro said that Honduras ” would recover its sovereignty. Venessa Cárdenas, one of the leaders of Crawfish Rock, said she wouldn’t mind Próspera becoming a more typical tourist area or a site for economic development: My advice would be: go pay your taxes like everyone else, go get your license like everyone else, and obey Honduran laws and regulations like everyone else.. »

The showdown begins

After tens of millions invested in the project, we can imagine that the founders of Prospera do not want to give up. Opposite them a sovereign country. It’s hard to know if the intentions of the founders are sincere when they talk about including the local population. They also protest that certain media, such as the Guardian, push them as cryptocolonialists. They swear that their intentions are sincere and that they want prosperity for all.

This is not the first attempt to create a decentralized space, we had already talked about the bitter failure of the Ocean Builders. What virgin land could however welcome bitcoins without the constraints imposed on all the States of the world? Is a Libertarian “Bitcoin State” Viable? The years to come will be rich in lessons, because we will have been able to observe how countries like El Salvador will develop, which has adopted bitcoin as its national currency (without adopting the libertarian attitude).

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Avatar of Mary Batshwok

Mary Batshwok

Subprimes, financial crises, galloping inflation, tax havens… Bitcoin was designed for more transparency and perhaps finally change the situation. I try to understand this new environment and try to explain it myself. The road is undoubtedly long, but it is worth it.

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