As the total crypto market capitalization once again exceeds $2 trillion, for many, thoughts once again turn to abandoning the rat race and moving abroad.
Prominent destinations for crypto-inclined include Puerto Rico, El Salvador, or even Cyprus. But what about Palau?
Through its digital residency program, Palau opens its doors to “cryptocitizens” in a bid to attract capital. For just $248, anyone can apply for the Root Name System (RNS) digital residency scheme.
But before you start looking at flights, you should know that the RNS program may not be what you had in mind.
Why is Palau turning to cryptocurrencies?
The Palau archipelago in the Pacific Ocean consists of more than 500 islands set against delicate sands and impeccable coral reefs.
Having gained independence from the US in 1994, Palau now has a “free association” agreement. Which means that the US has a 50-year responsibility to defend the sovereign state from the date of independence.
English is one of the three official languages, along with Palauan and Sonsoroles-Tobiano. And with US dollars as the national currency, payments are universal and visiting foreigners benefit from a substantial degree of purchasing power parity.
Tourism accounted for nearly 50% of Palau’s gross domestic product before the health crisis hit. But travel restrictions have decimated this industry, leaving a huge black hole in the country’s coffers.
Struggling to diversify, through its RNS program, Palau seeks to become a crypto hub.
For less than $250, you can order a “Limited Edition NFT ID Card”. This grants the holder the status of digital residence, granting benefits such as the use of a Palau business address and opening of regional bank and brokerage accounts.
These benefits could be useful to crypto investors whose governments oppose digital currency trading.
Digital residence is not the same as residence
Unfortunately, digital residency status does not necessarily mean holders can live in Palau, open a business there, or become a citizen. In other words, the “digital” in digital residency is exactly that.
The RNS website talks about the geographical borders that make life difficult in a “hyperconnected world”. The program seeks to solve this problem by offering the world’s first blockchain digital residence.
“RNS’s mission is to usher in a global, borderless world and support the next generation of global digital existence.“
On the plus side, “RNS partners” have 0% income tax, access to US markets, a “stable low-risk environment” (which is debatable considering the worsening debt-to-equity ratio country’s GDP) and a physical US ZIP code address.
It remains to be seen how successful RNS will be. But one thing is for sure, including residency, or perhaps citizenship, would make the proposal much more attractive.
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This post You can become a paradise “crypto citizen” of the island for only $248. But what’s the catch?
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