Honduras is home to its own Bitcoin City, Prospera. Although its neighbor El Salvador’s project has received more media attention, Honduras’ Bitcoin City is older and dates back more than a decade ago. Located on the Caibbean island of Roatan, it is envisioned as a city where people can live entirely off Bitcoin.
From a ZEDE to Honduras’ Bitcoin City
Prospera is a Zone for Employment and Economic Development (ZEDE), launched as part of Honduras’ efforts to attract foreign investment to less inhabited parts of the country. Prospera, founded by Venezuelan-born entrepreneur Erick A. Brimen, was the first ZEDE in Honduras to get off the ground and has been a focal point in discussions on how innovative economic models can reduce poverty.
“What is now Prospera started as an idea that emanated from being from Venezuela,” Brimen said to Insider News. “In my country of birth, there was a tremendous amount of poverty, very concentrated wealth, and a huge separation between the two. I wanted to find ways to get rid of poverty.”
The project dates back to 2013, when it was approved by Honduras’ Supreme Court. Since construction began in 2021, the city has helped launch more than 200 businesses and raised over $100 million in investments.
Its low taxation model includes a 1 percent income tax, 5 percent personal income tax, and a 1 percent land value tax, making it an attractive hub for businesses and residents. Furthermore, the city has embraced cryptocurrency, with all transactions—including tax returns—being processed in Bitcoin.
Residents only need to scan their wallet QR code to complete payments within seconds. According to Dusan Matuska, founder of AmityAge, “Tax returns are a one-page thing and took me less than 5 minutes. This is how it should be done in every country.”
Prospera’s governance model sets it apart, offering a semi-autonomous structure that allows it to operate largely independently from the Honduran government. The city is managed by an anonymous council and overseen by an arbitration court composed of former US judges, who handle disputes. Private security firms enforce the city’s rules, further emphasizing its distinct governance approach.
Prospera faces opposition
Despite these unique features, Prospera faces significant opposition in Honduras. ZEDES were initially championed by former President Juan Orlando Hernandez, but with his extradition to the US on charges of corruption and drug trafficking in 2022, political support for ZEDES dwindled.
When Xiomara Castro became president, she vowed during her campaign to eliminate ZEDES, stating at the UN General Assembly, “Never again will we carry the stereotype of the banana republic.” In 2022, Congress voted unanimously to repeal ZEDES, though international treaties protect Prospera for at least 50 years, preventing its immediate dissolution.
In response to the government’s actions, Honduras Prospera Inc. filed a 10.775 billion dollar lawsuit against the Honduran government at the International Centre for Settlement of Investment Disputes (ICSID). This amount equates to nearly two-thirds of the country’s 2022 budget.
Critics believe Prospera could win the lawsuit, as ICSID has a reputation for favoring corporations in such disputes. Despite the legal and political challenges, ZEDES like Prospera remain operational, though the city has had to start paying taxes on goods that enter its territory.
Prospera’s future hinges on the outcome of the ongoing legal battles and political developments. The case is being closely watched, as it could set an important precedent for how other economic zones around the world navigate national and international legal frameworks.
Related: Bitcoin City: Another World’s First for El Salvador