South American countries are very fond of crypto, as it seems. El Salvador was the world’s first country to switch to Bitcoin as legal tender, and other countries are preparing legal framework to legalize cryptocurrencies. While Honduras hasn’t done that as of now, it has an interesting charter city where Bitcoin bonds are the standard.
The so-called free city of Prospera is trying to show the world that existence without full control from a state nation is possible. It pushes the decentralized aspect of cryptocurrencies to the max and has adopted Bitcoin as legal tender, following El Salvador’s move.
Economic Freedom is the Goal
The goal of Prospera is simple – economic freedom while existing without nation-state control. The charter city is still part of Honduras as a nation-state, but it’s controlled by a private entity. That entity is Honduras Prospera Inc. ran by Joel Bomgar. He says that the city is not just about Bitcoin. It’s about freedom; more specifically, the economic freedom every nation-state craves.
While El Salvador has already done that, the economic freedom in Prospera’s case is on a smaller scale. The decision to adopt Bitcoin as legal tender is a choice instead of a requirement. The form of Bitcoin adoption between Prospera and El Salvador are different, so they’re not one and the same as many people think.
Prospera is located in Roatan, a West Caribbean tropical island off the coast of North Honduras. It signed a charter agreement with Honduras that guarantees governance autonomy for its residents in the next 50 years. The charter city can create its own laws, committees, and agencies, and acts as an independent jurisdiction. Of course, the city of Prospera must still follow Honduras’ constitution, criminal law code, and international treaty.
Independent Constitution and Legal Code
Prospera has its own constitution and legal code that spread on 3,500 written pages. It holds hundreds of acres of land in Roatan, with most of it taken by the Honduran Zone for Employment and Economic Development. This zone is heavily dependent on Prospera’s digital residency platform, eProspera, while the city slowly acquires more land over time.
How will that happen? All the taxation and fees its residents pay will generate various streams of revenue that can be used to buy land. A total of 12% of this revenue will be remitted to Honduras. Prospera will keep the rest. The free charter city can also fundraise money any time it wants to, and has so far raised over $60 million that way.
How was Bitcoin legalized in Prospera? Through taxation. The taxes in Prospera include 5% income tax, 2.5% sales tax, 1% corporate revenue tax, and 1% land value tax. There are no other taxes in Prospera at all. Due to this, residents can transact in whatever currency they want. They chose Bitcoin as legal tender, with only one rule – the amount of Bitcoin used must be equal or greater in value denominated in USD or the Honduras lempira.
It’s an exciting project that might take some time to fully develop, but it’s on the right track. Prospera is an experiment the world wants to see progress, as it can be the key to full economic freedom for independent zones.
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